Problem
This question was posted before, but did not receive a response, will someone be able to assist now?
Let the real high-powered money (H / P), equals $4,585 billion, and the real government bond (B / P) equals $3,150 billion.
(a) If the rate of inflation is 5.5% what is the amount of seignorage (inflation tax)?
(b) What is the real interest rate if the nominal interest rate is 8.5%?
(c) Calculate the amount of real interest on government bonds.
(d) What should be the maximum amount government budget deficit that keeps the real value of bonds and real high-powered money fixed?
(e) If real government spending is $1500 billion how much real taxes (net of transfer payment) government must collect that keeps real value of bonds and real high-powered money fixed?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.