Real money demand in the economy is given by
L = 0.3Y - 600i,
where Y is real income and i is the nominal interest rate. In equilibrium, real money demand L equals real money supply M/P. Suppose that Y equals 2000 and the real interest rate is 5%.
(a) At what rate of inflation is seignorage maximized?
(b) What is the maximum amount of seignorage revenue?
(a) 47.5%
(b) 135.375
Economics
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A. increase aggregate demand in the U.S. B. decrease aggregate demand in the U.S. C. decrease aggregate supply in the U.S. D. increase aggregate supply in the U.S.
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The return to any factor of production that is in fixed supply is
A. producer surplus. B. factor surplus. C. pure profit. D. pure rent.
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