Suppose the following production function: Q = 10 (K) 1/3 (L) 2/3 subject to; W *L + r * K = Cost.Suppose that K the amount of capital is K =8.
September 3, 2020When forming a graph or model it is not necessary to provide perfectly proportioned graphs, just draw it on the paper and take the photo by smart…
September 3, 2020
- Suppose there’s a country where the velocity of money is constant.
- Real GDP grows by 6 percent per year, the money stock grows by 10 percent per year, and the nominal interest rate is 7 percent.
- A) What is the real interest rate?
- B) What is the equation for real interest rate? How can we interpret this equation?
- C) What does the real interest rate tell us?
