Suppose that in the country of Eurasia, the velocity of money is constant. Real GDP grows at a rate of 2 percent per year, the money stock grows by 8 percent per year and the nominal interest rate is 9 percent. What is The growth rate of nominal GDP? The inflation rate? The real interest rate?

Suppose that in the country of Eurasia, the velocity of money is constant. Real GDP grows at a rate of 2 percent per year, the money stock grows by 8 percent per year and the nominal interest rate is 9 percent. What is The growth rate of nominal GDP? The inflation rate? The real interest rate?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter32: Macroeconomic Policy Around The World

Section: Chapter Questions

Problem 28CTQ: Why are inflationary dangers lower in the high-income economies than in low-income and middle-income...

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Question

Suppose that in the country of Eurasia, the velocity of
money is constant. Real GDP grows at a rate of 2
percent per year, the money stock grows by 8
percent per year and the nominal interest rate is 9
percent. What is
a. The growth rate of nominal GDP?
b. The inflation rate?
c. The real interest rate?

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