Macroeconomics 5th Edition by Olivier Blanchard

Exercise 5

What is the rate of money growth that maximizes seignorage in the economy described in problem 2(b) (Hint : You learned in problem 2(b) that seignorage, in the medium run, is greater at money growth of 50% than at money growth of 25% or 75%. Start by calculating seignorage for money growth rates near 50%. Increase and then decrease money growth rates by one percentage point until you find the answer.)