A classical economy is described by the equations
AD: Y = 1000 + 100M/P
AS: 
= 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?
Definitions:
Hypothetical Syllogism
A logical argument consisting of two conditional premises and a conclusion, based on if-then scenarios.
Modus Ponens
A valid form of argument in which if a conditional statement ("if P then Q") is accepted, and P is asserted to be true, then Q necessarily follows.
Modus Tollens
A logical argument form where the contrapositive of a premise is used to infer the negation of the hypothesis.
Hypothetical Syllogism
A logical argument composed of two conditional statements and a conclusion, based if the first premise is true, then the second one follows.
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