question archive Suppose the real money demand is given by Φ=????−0
Suppose the real money demand is given by Φ=????−0
Subject:BusinessPrice: Bought3
Suppose the real money demand is given by Φ=????−0.9(????+????)????
where Φ is real money demand, ???? is the exponential function, ???? is real interest rate, ???? is growth rate of money, and ???? is output. The money market equilibrium condition is ????????=Φ, where ???? is the quantity of money and ???? is the price level.
How, if at all, does an increase in ???? affect the government's real revenue from printing money? Explain your answer. What value of ???? maximizes the government's real revenue from printing money? Show mathematically and be sure to show the steps leading to your answer.
