Homework Answers
Ans. :-
If Inflation rises by 8% :-
- Expected real yield on money and non money assets Increase and demand for money Increases.
If inflation rose by 7% :-
- Expected real yield on money and non money assets Rise by 1 Percent and demand for money Increases.
If yield on non money assets rose by 9% :-
- Return to alternative investment relative to return on money Rise,regardless of level of inflation. This Increases Portfolio demand for money.
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