Answers
For us, Real interest rale = 37. e gap growth rate = 6%. uus, monetary growth. WK 01 (005-360) for foreign 9 sest rate 237 1 0 gap growth rate 6%. Monetary growth = 50% a) Calculation of Inflation rate.
1 For us As ey C uncome elasticity of money demand) and ei (nominae Munterest rate elasticity of money demand) is not mentioned in the question FRI me neill asume the estimates 06 grien by economists . ie Tey = 2/3 i te e = -1/0 So that money demand is sensiline to changes in income than to changes lie the nominal interest WK 01 (006-359) Jormula = % P = % M - (2/3) +% Y = 10% - (2/3) x 3%. 1 T W T F 1 2 3 7 8 9 10 14 15 16 17 21 22 23 24 28 B - 2017 S S 4 5 11 12 18 19 25 26 Therefore, kus = 8%