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Recitation TA &
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Econ 520 F10
Homework 3 (3.2 corrected late 10/14 in bold)
10/12, 10/14, due 10/15
For full credit, show your calculations on each problem.
3.1 (10 homework points)
If real money balances are $2000 billion (Year 2010
dollars), and the nominal money stock is expanding at an annual rate of 20%/year, what
is the annual rate of seigniorage (in 2010 dollars)?
Assume for simplicity that the
government directly creates the entire money stock and pays no interest on it:
3.2
(10 homework points)
If real money balances are $2000 billion (
2010
dollars), what
annual rate of expansion of the nominal money stock is required to meet a seigniorage
target of $600 billion (2010 dollars) per year?
Assume for simplicity that the
government directly creates the entire money stock and pays no interest on it:
3.3
(10 homework points)
If real money balances are $2000 billion (2010 dollars), and
inflation is 30%/year, what is the annual inflation tax on money balances (in 2010
dollars)?
3.4 (10 HW points)
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 Fall '07
 OGAKI

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