(c) What is the interest rate when the supply of central bank money increases by $200? (d) Suppose that the financial market is in equilibrium at the interest rate you calculated in part c above, what is the overall money supply?
(c) What is the interest rate when the supply of central bank money increases by $200? (d) Suppose that the financial market is in equilibrium at the interest rate you calculated in part c above, what is the overall money supply?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![(c) What is the interest rate when the supply of central bank money increases by $200?
(d) Suppose that the financial market is in equilibrium at the interest rate you calculated in part
c above, what is the overall money supply?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff1134513-47c3-47c8-bf76-d7cb31a7f997%2F56c2929d-4c61-4234-aff1-be40575501ce%2Fqk3nd1g_processed.png&w=3840&q=75)
Transcribed Image Text:(c) What is the interest rate when the supply of central bank money increases by $200?
(d) Suppose that the financial market is in equilibrium at the interest rate you calculated in part
c above, what is the overall money supply?
![3. This question focuses on the market for central bank money. Assume that people hold no currency
and that the ratio of reserves to deposits is 0.1. The demand for money money is given by
Md = $Y (0.8-4i)
The nominal income is $5000 and the supply of central bank money is $100.
(a) What is the demand for central bank money?
(b) Find the equilibrium interest rate in the market for central bank money.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff1134513-47c3-47c8-bf76-d7cb31a7f997%2F56c2929d-4c61-4234-aff1-be40575501ce%2Fs3y94fm_processed.png&w=3840&q=75)
Transcribed Image Text:3. This question focuses on the market for central bank money. Assume that people hold no currency
and that the ratio of reserves to deposits is 0.1. The demand for money money is given by
Md = $Y (0.8-4i)
The nominal income is $5000 and the supply of central bank money is $100.
(a) What is the demand for central bank money?
(b) Find the equilibrium interest rate in the market for central bank money.
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