Exercise: Suppose V is constant,M is growing 5%per year, Y is growing 2%per year,and r=4. a.Solve for /(the nominal interest rate). b.If the Fed increases the money growth rate by 2 percentage points per year,find A/. C. Suppose the growth rate of y falls to 1%per year. ·What will happen toπ？ What must the Fed do if it wishes to keep元constant? CHAPTER 7 Money and Inflation slide 30CHAPTER 7 Money and Inflation slide 30 Exercise: Suppose V is constant, M is growing 5% per year, Y is growing 2% per year, and r = 4. a. Solve for i (the nominal interest rate). b. If the Fed increases the money growth rate by 2 percentage points per year, find i . c. Suppose the growth rate of Y falls to 1% per year. ▪ What will happen to ? ▪ What must the Fed do if it wishes to keep  constant?