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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Return to Problem 10.5 and now assume that Smith and Jones conduct their exchanges in paper money. The total supply of such money is $60 and each individual wishes to hold a stock of money equal to = of the value of transactions made per period. a. What will the money wage rate be in this model? What will the nominal prices of X and Y be?
b. Suppose the money supply increases to $90, how will your answers to part a change? Does this economy exhibit the classical dichotomy between its real and monetary sectors?
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