In a particular economy the real money demand function is M° 3,000 +0.25Y-9,000i. P Assume that M = 6,000, P = 2, and ² = 0.02. Determine the real interest rate, r, that clears the asset market when Y = 8,000. (Enter your answer in decimals, rounded to three decimal places.) r = This determines point A in the graph that you will draw.

College Algebra
7th Edition
ISBN:9781305115545
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
Chapter2: Functions
Section: Chapter Questions
Problem 7T
Question
In a particular economy the real money demand function is
M°
3,000 +0.25Y-9,000i.
P
Assume that M = 6,000, P = 2, and ² = 0.02.
Determine the real interest rate, r, that clears the asset market when Y = 8,000. (Enter your answer
in decimals, rounded to three decimal places.)
r =
This determines point A in the graph that you will draw.
Transcribed Image Text:In a particular economy the real money demand function is M° 3,000 +0.25Y-9,000i. P Assume that M = 6,000, P = 2, and ² = 0.02. Determine the real interest rate, r, that clears the asset market when Y = 8,000. (Enter your answer in decimals, rounded to three decimal places.) r = This determines point A in the graph that you will draw.
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