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Nominal interest rate (percent per year) Nominal interest rate 7.0 (percent) 6.0 5.0 4.00 4.0 MS Central bank targets: Quantity of money O Monetary base Excess demand for money. People sell bonds and the interest rate rises MD 10 11 12 Quantity of money (trillions of dollars)

Nominal interest rate (percent per year) Nominal interest rate 7.0 (percent) 6.0 5.0 4.00 4.0 MS Central bank targets: Quantity of money O Monetary base Excess demand for money. People sell bonds and the interest rate rises MD 10 11 12 Quantity of money (trillions of dollars)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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In the graph you've just explored, is the money market in equilibrium if the interest rate is 4 percent per year? _______. The quantity of money demanded is _______ trillion and the quantity of money supplied is _______ trillion, so there is _______.

A. Yes; $10; $10; an equilibrium

B. No; $11; $9; an excess demand of $2 trillion

C. No; $9; $11; an excess supply of $2 trillion

Nominal interest rate (percent per year) Nominal interest rate 7.0 (percent) 6.0 5.0 4.00 4.0 9 MS Central bank targets: Quantity of money O Monetary base Excess demand for money. People sell bonds and the interest rate rises MD 10 11 12 Quantity of money (trillions of dollars)
Transcribed Image Text:Nominal interest rate (percent per year) Nominal interest rate 7.0 (percent) 6.0 5.0 4.00 4.0 9 MS Central bank targets: Quantity of money O Monetary base Excess demand for money. People sell bonds and the interest rate rises MD 10 11 12 Quantity of money (trillions of dollars)
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