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Business, 07.04.2020 22:25 aaron2113

An economy has the following money demand function: (M/P)d = (1/3)Y/i. Suppose the announcement of a new head of the central bank, with a reputation as a tough inflation fighter, reduces expected inflation by 2 percentage points. According to the Fisher effect, what is the new nominal interest rate?

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An economy has the following money demand function: (M/P)d = (1/3)Y/i. Suppose the announcement of a...
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