Growth rate of money

Related BrainMass Solutions

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  , %ΔM is the rate of growth of the money supply and %ΔY is the rate of growth of real GDP.

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  However, the rate of growth of money may effect nominal variables like the wage level or the inflation rate.

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  Question: If the result is an increase in the growth of real output/income, what would you expect to happen to interest rates if the Fed holds the money supply (or the rate of growth of the money supply) constant?

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  Using the data on the growth rate of M2 and inflation in your spreadsheet, run a regression of the rate of inflation on the rate of growth of the money supply.