Respuesta :
"An economy with constant velocity of money has real GDP growth of" 3%, money growth of 7%, and a real interest rate of 2%. Nominal interest rate = 6%
Real GDP growth = Y = 3%
Money growth = M= 7%
Real interest rate = r = 2%
Velocity = constant = 0%
Nominal interest rate = ?
Nominal interest Rate = 6%
The quantity theory of money (QTM) equation is given by
ΔM + ΔV = ΔP + ΔY
ΔP = ΔM + ΔV – ΔY
Substituting the percentages given in the problem,
ΔP = ΔM + ΔV – ΔY
ΔP = 7% + 0% – 3%
ΔP = 4%
The fisher equation which relates real and nominal interest rate is given by
Real interest rate = Nominal interest rate - Inflation rate
Re-arranging the equation to find nominal interest
Nominal interest rate = Real interest rate + Inflation rate
Nominal interest rate = 2% + 4%
Nominal interest Rate = 6%
Gross domestic product GDP is a financial degree of the market price of all of the final items and offerings produced and offered in a specific time period through international locations. because of its complex and subjective nature this measure is often revised earlier than being considered a reliable indicator.
Learn more about GDP here:https://brainly.com/question/1383956
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