What rate of money growth mexican government try to achieve

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Mexico currently has an annual domestic inflation rate of about 20 percent. Suppose that Mexico wants to stabilize the floating market exchange-rate value of its currency (dollars/peso) in a world in which dollar prices are generally rising at 3 percent per year. What must the rate of inflation of domestic peso prices come down to?

If the quantity theory of money holds with a constant k, and if Mexican real output is growing 6 percent per year, what rate of money growth should the Mexican government try to achieve?

Reference no: EM131213693

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