Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Chapter 13, Problem 13E
(a)
To determine
Determine the nominal interest rate.
(b)
To determine
Whether it is possible for the nominal interest rate to be negative.
(c)
To determine
Explain the
(d)
To determine
Stimulate the economy to end the deflation.
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we make use of the general monetary model here, where L is no longer assumed constant, and money demand is inversely related to the nominal interest rate. Recall from that earlier question inflation rate in Korea is = 10% and inflation rate in Japan is = 0%. In addition, assume that the bank deposits in Japan pay 2% interest rate (i¥ = 2%).
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Chapter 13 Solutions
Macroeconomics (Fourth Edition)
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