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Unformatted text preview: (10 homework points) a) Write the relationship the Quantity Theory of Money predicts between the nominal money stock M, the demand for real money balances m d , and the equilibrium price level P (base year = 1): b) If real money demand is $1036.8 Billion (1982-84 dollars) in August 2006, and the nominal money stock in August 2006 was $2114.0 billion (Aug. 2006 dollars), what price level does the Quantity Theory of Money predict for Aug. 2006? Give your answer to the nearest 0.1, with a base level of 1982-4 = 100 , and show your calculation : Return after class 9/28, at your Friday recitation, or to your TA’s mailbox outside Arps 410 by 4:00 PM Friday 9/29. Partial credit will be given for late homework. (80% for 1 class late, 50% if in by last class of quarter.) Cooperation on homeworks is permitted and even encouraged. However, you must complete and sign your own homework....
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This note was uploaded on 07/17/2008 for the course ECON 520 taught by Professor Ogaki during the Fall '07 term at Ohio State.
- Fall '07