a) Assume that each dollar held for transactions purposes is spent on the average five times per year to buy final goods and services. If the nominal GDP is $10,000 billion ($10 trillion), what is the transaction demand (D¿)? $ billion, because b) The table below shows the asset demand at certain rates of interest. Using your answer to part (a) complete the table to show the total demand for money at various rates of interest. Interest rate Asset demand Total demand (in %) (billions), (Da) $ 30 (billions), (Dm) 10 $. 60

a) Assume that each dollar held for transactions purposes is spent on the average five times per year to buy final goods and services. If the nominal GDP is $10,000 billion ($10 trillion), what is the transaction demand (D¿)? $ billion, because b) The table below shows the asset demand at certain rates of interest. Using your answer to part (a) complete the table to show the total demand for money at various rates of interest. Interest rate Asset demand Total demand (in %) (billions), (Da) $ 30 (billions), (Dm) 10 $. 60

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter16: Monetary Policy

Section: Chapter Questions

Problem 1SQP

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(c) Explain how the GDP and the interest rate are related to the transactions and asset demands for money.
If the nominal GDP is 1000 billion euro, and on average every euro is spent 4 times a year, the amount of money required for transactions is:
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