Faig department of economics utm monetary

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Unformatted text preview: s UTM) Monetary Intertemporal Model 2013/Jan 5/7 Equilibrium For the time being, expected future ináation (i ) is assumed to be exogenous As in Real Intertemporal Model, the current labour and goods markets determine Y and r Current money market determines P Prof. Faig (Department of Economics UTM) Monetary Intertemporal Model 2013/Jan 6/7 Numerical Example Expected future ináation: i = 0.02 Output and real interest rate (determined in current labour and goods markets): Y = 1100 r = 0.03 Y 1 + 2R Supply of money: M s = 2000 Demand for money: M d = P Using R r + i , the aggregate price is determied by: Ms = Md 2000 = P Prof. Faig (Department of Economics UTM) P 1100 1 + 2 (0.02 + 0.03) =2 Monetary Intertemporal Model 2013/Jan 7/7...
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This document was uploaded on 02/07/2014.

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