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What is the equilibrium interest rate

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The demand for money is given by Md = $Y (0.3-i), where $Y = 120 and the supply of money is $30.

a. What is the equilibrium interest rate?

b. Suppose the central bank wants to decrease interest rate by 2 percentage point (e.g. , from 8% to 6%). Given the above information for Md and Y, figure out the level of money supply that it will have to set in order to achieve its interest rate target.

Reference no: EM131499327

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