You are given the following information: Money demand for transaction (Mdt) = 0.2Y Money demand for speculation (Mds/P) = 500 – 5,000r Money supply (Ms) = 2,500 Price level (P) = 2 Income level (Y) = 10,000 where r represents the rate of interest. Based on the above information, calculate the equilibrium levels of interest rate and quantity of money. . If the interest rate is fixed at 0.1, what is the quantity of money demanded and supplied. Demonstrate your answers to parts (d)(i) and (d)(ii) in an appropriate diagram.
You are given the following information: Money demand for transaction (Mdt) = 0.2Y Money demand for speculation (Mds/P) = 500 – 5,000r Money supply (Ms) = 2,500 Price level (P) = 2 Income level (Y) = 10,000 where r represents the rate of interest. Based on the above information, calculate the equilibrium levels of interest rate and quantity of money. . If the interest rate is fixed at 0.1, what is the quantity of money demanded and supplied. Demonstrate your answers to parts (d)(i) and (d)(ii) in an appropriate diagram.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You are given the following information:
Money
Money demand for speculation (Mds/P) = 500 – 5,000r
Money supply (Ms) = 2,500
Price level (P) = 2
Income level (Y) = 10,000
where r represents the rate of interest. Based on the above information,
- calculate the equilibrium levels of interest rate and quantity of money.
.
- If the interest rate is fixed at 0.1, what is the quantity of money demanded and supplied.
- Demonstrate your answers to parts (d)(i) and (d)(ii) in an appropriate diagram.
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