Assignment:
Suppose money demand for Econland is (M/P)d= 5000 + 0.2Y +1000i.
a. Assume P=100, Y=1000 and i=0.1. Find the real money demand, nominal money demand and velocity.
b. If price level doubles from P=100 to P=200. Find the real money demand, nominal money demand and velocity, comment how these variables differ than in part (a).