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Broad Money(Billion US$) Narrow Money(Billion US$) CPI 1984=100 (January 1) InterestRate (percent) Year M2 M1 CPI 1984=100 Treasury Bill Interest Rate 3M Annual growth rate for M1 Annual growth rate for M2 Inflation Rate Real interest rate 1988 2991
| Broad Money(Billion US$) | Narrow Money(Billion US$) | CPI 1984=100 (January 1) | InterestRate (percent) | |||||
| Year | M2 | M1 | CPI 1984=100 | Treasury Bill Interest Rate 3M | Annual growth rate for M1 | Annual growth rate for M2 | Inflation Rate | Real interest rate |
| 1988 | 2991.7 | 785.7 | 118.275 | 6.67 | ||||
| 1989 | 3166.8 | 795.4 | 123.942 | 8.11 | ||||
| 1990 | 3287.8 | 827.2 | 130.658 | 7.49 | ||||
| 1991 | 3381.2 | 910.4 | 136.167 | 5.38 |
Please calculate the growth rate of M1 and M2, inflation rate, and real interest rate as shown above. (Basically, all the blanks in the table)
Expert Solution
Solution:
| Year | M2 | M1 | CPI | Treasury Bill Interest Rate 3M | Annual growth rate for M1 | Annual growth rate for M2 | Inflation rate | Real interest rate |
| 1988 | 2991.7 | 785.7 | 118.275 | 6.67 | ||||
| 1989 | 3166.8 | 795.4 | 123.942 | 8.11 | 5.85% | 1.23% | 4.79% | 3.32% |
| 1990 | 3287.8 | 827.2 | 130.658 | 7.49 | 3.82% | 4.00% | 5.42% | 2.07% |
| 1991 | 3381.2 | 910.4 | 136.167 | 5.38 | 2.84% | 10.06% | 4.22% | 1.16% |
Working:
Formula = (Current year - Previous year) / Previous year
| Annual growth rate for M1 | Annual growth rate for M2 | Inflation rate | Real interest rate |
| (3166.8 - 2991.7)/2991.7 | (795.4-785.7) / 785.7 | (123.942-118.275) / 118.275 | 8.11% -4.79% |
| (3287.8 - 3166.8) / 3166.8 | (827.2-795.4) / 795.4 | (130.658 - 123.942) / 123.942 | 7.49% - 5.42% |
| (3381.2 - 3287.8) / 3287.8 | (910.4 - 827.2)/ 827.2 | (136.167 - 130.658) / 130.658 | 5.38% - 4.22% |
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