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Business, 25.11.2021 08:00 taylorlanehart

Suppose you are the chairman of the Central Bank in Gilead. The current inflation rate is 15%. Gilead has a real income growth rate of 3%. The world real interest rate is constant and 6%. a. [5 points] What is the growth rate of money supply in this economy? b. [5 points] As the Central Bank, you want to achieve a target inflation rate of 8% within a year by adopting a money supply target. What money supply growth rate will allow you to achieve your target inflation rate? c. [5 points] Suppose instead you want to adopt an interest rate policy to achieve the target inflation rate of 8%. What target nominal interest rate will allow you accomplish your inflation target?

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Suppose you are the chairman of the Central Bank in Gilead. The current inflation rate is 15%. Gilea...
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