Explain excess demand for money

Reference no: EM13173644

Imagine that in the market for loanable funds the equilibrium interest rate is equal to 10% and the quantity of loanable funds is $500 billion. Answer the following questions:
(a) At which interest rate will there be an excess demand for money? What does this mean?
(b) At which rate will there be an excess supply of money? What does this mean?
(c) Describe in detail the adjustment process in the money market when there is an excess demand for money.

Reference no: EM13173644

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