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    Money, supply, nominal interest are assessed.

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    Use the attached data on the nominal money supply, nominal interest rates, the consumer price index, and inflation rates, to compute the current real stock of money (for M2 only) in the US and real interest rates for each of the ten years.

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    Solution Preview

    The calculations are fairly simple, you can see the formulae from the excel table. I will explain why such calculations are appropriate.

    1. In economics, the term "real" is used to express an amount of money in term of another year's purchasing power. For example, if one car is worth $10000 in year A (called the base year), and $15000 in ...

    Solution Summary

    Money, supply, nominal interest are assessed. The current real stock of money and the real interest rates are both computed.