A classical economy is described by the equationsAD: Y = 1000 + 100M/PAS: 
= 1500The 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?
What will be an ideal response?
| (a) | 4 crowns/florin |
| (b) | 20 florins |
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