Posted by **Sally** on Monday, March 19, 2012 at 11:26am.

Consider an economy with a constant nominal money supply, a constant level of real output Y = 100, and a constant real interest rate, r = 0.10. Suppose that the income elasticity of demand is 0.5 and the interest elasticity of money demand is –0.1.

By what percentage does the equilibrium price level differ from its initial value if output increases to Y = 106 (and r remains at 0.10).

I don't know where to start.

- Economics -
**Anonymous**, Tuesday, October 25, 2016 at 4:41pm
Interest rate increase

## Answer This Question

## Related Questions

- Macroeconomics - Suppose in an economy the nominal money supply is $ 1000, the ...
- Macroeconomics - suppose that this year's money supply is $500b, nominal gdp is...
- international economic - 2.) This question uses the general monetary model, in ...
- Economics help - What is the short-run effect on the exchange rate of an ...
- Economics - If the velocity of circulation is constant, real GDP is growing at 3...
- Macroeconomics - Suppose that velocity is constant. The economy's output of ...
- macroeconomics 2year uni - Consider the following numerical version of the IS-LM...
- social sciences - Consider the following numerical version of the IS-LM model: C...
- Macroeconomics - Suppose the Fed wishes to use monetary policy to close an ...
- Economics - The Fed conducts an open market purchase of securities. Explain the ...

More Related Questions