A classical economy is described by the equations AD Y = 1000 + 100M/P AS Y = 1500.The real exchange rate is 3 bushels/bottle,the domestic nominal money supply is 30 florins,and the foreign price level is 8 crowns/bushel.
a.What is the nominal exchange rate?
b.If the government wants to maintain an official nominal exchange rate of 6 crowns/florin,what must the nominal money supply be?
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