Use the graph below to answer the following questions:
Dt is the transactions
demand for money,
Dm is the total demand for
money, and
Sm is the supply of
money.
1. What is the transactions demand for money in this
market?
2. What is the asset demand for money if the interest
rate is 5 %?
3. If the money market is in equilibrium at 7 %, what
change in money supply must occur for the equilibrium rate to
change to 5 % (include a negative if a decrease in money
supply)
4. If the money market is in equilibrium at 9 %
and the money supply has increased to Sm3,
by how much has total demand for money changed?
Use The Graph Below To Answer The Following Questions Dt Is The Transactions Demand For Money Dm Is The Total Demand F 1 (152.07 KiB) Viewed 30 times
Dt Sm1 Sm2 Sm3 9 I - I 1 Rate of interest Dm 0 265 115 165 215 Quantity of Money
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