# soln3 - Problem Set#3 Solutions Textbook Chapter 8 Exercise...

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Problem Set #3 Solutions Textbook Chapter 8 Exercise 5: Y Y V V M M - + = π Your mandate is price stability, so π = 0. Therefore: V V Y Y M M - = a.) % 4 = M M b.) % 1 - = M M c.) % 3 = M M d.) % 2 - = M M e.) % 1 %) 1 ( = - - = M M Textbook Chapter 8 Exercise 14: a.) As derived in class: M M V PY M M M PY M × = × = 1 Inflation tax as a proportion of GDP equals the money growth rate times money as a proportion of GDP. b.) As derived in class:

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PY M Y Y PY M × + π = c.) Assume that % 2 = Y Y i. From Economic Report of the President, 2008 M = Monetary Base = \$149,021 Million (Table B-71) PY = Nominal GDP = \$3,128.4 Trillion (Table B-1) π = 10.3% (Table B-63 (Year to year)) Therefore 0059 . 4 . 128 , 3 \$ 149 \$ %) 2 % 3 . 10 ( = + = × + π = Trillion Trillion PY M Y Y PY M ii. From Economic Report of the President, 2008 M = Monetary Base = \$788,135 Million (Table B-71)
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## This note was uploaded on 07/17/2008 for the course ECON 502.02 taught by Professor Mccafferty during the Spring '08 term at Ohio State.

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soln3 - Problem Set#3 Solutions Textbook Chapter 8 Exercise...

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