You are given the following equation for the real demand

Reference no: EM13377650

You are given the following equation for the real demand for money: (M/P)d = .25Y - 50 r

A. Compute the demand for money for each of the following interest rates when income is equal to $11,940, $12,000, $12,120, and $12,1280:

R= 4.4 r= 4.7 r= 5.0 r= 5.3 r= 5.6 r= 6.2

B. Given your answers to part a, graph the demand for money curves when income equals $11,940 and income equals $12,180.

C. Suppose the real money supply, Ms/ P, equals $2,750. Given your answers to part a, find the interest rates and levels of real income at which the money market is in equilibrium. Use these combinations of the interest rate and real income to graph the LM curve, given that the real money supply equals $2,750. Label this curve LM0.

D. Suppose the real money supply increase to $2,780. Given your answers to part a, find the new combinations to graph the new LM curve, given that the real money supply now equals $2,780. Label this curve LM1.

E. Suppose the real money supply decreases to $2,720. Given your answers to part a, find the new combinations of the interest rates and real income at which the money market is in equilibrium. Use these combinations to graph the new LM curve, given that the real money supply now equals $2,720. Label this curve LM2.

Reference no: EM13377650

Questions Cloud

If elasticity is -2 price is 10 and marginal cost is 8 : if elasticity is -2 price is 10 and marginal cost is 8 should you raise or lower price?lower price. since demand

Suppose you have 10 indivduals with vales 1 2 3 4 5 6 7 8 9 : suppose you have 10 indivduals with vales 1 2 3 4 5 6 7 8 9 10. . our marginal cost of production is 2.50. what is the

Consider the table below for the neighboring nations of : consider the table below for the neighboring nations of northland and west coast. the table lists the maximum feasible

1 discuss the current economic situation in the us as : 1. discuss the current economic situation in the u.s. as compared to five 5 years ago. include interest rates

You are given the following equation for the real demand : you are given the following equation for the real demand for money mpd .25y - 50 ra. compute the demand for money

Consider an economy in which taxes planned investments : consider an economy in which taxes planned investments government spending on goods and serves and net exports are

Which of the following public policies restricts : which of the following public policies restricts competition?a. licensingb. patentsc. import quotasd. all of the

The economic staff of the us department of the treasury has : the economic staff of the u.s. department of the treasury has been asked to recommend a new tax policy concerning the

When you buy a set of speakers best buy asks if you would : when you buy a set of speakers best buy asks if you would like to purchase insurance for your speakers. assume that

User Account

All Pages