Answer Happy

The total demand for money is equal to the transactions demand plus the asset demand for money. 1. Assume that each dollar held for transactions purposes is spent on the average 2 times per year to buy final goods and services. If nominal GDP is 1,400 billion dollars, what is the transaction's demand for money? Number 2. The table below shows the asset demand at certain rates of interest. Using your answer to part 1, complete the table to show the total demand for money at various rates of interest. Interest rate (in %) Asset demand (billions) Total demand (billions) 8 30 Number 6 70 Number 4 110 Number 2. 150 Number 3. If the money supply is 750 billion, what will be the equilibrium rate of interest? Number 4. If the money supply rises to 830, will be the new equilibrium rate of interest? Number 5. If GDP rises, what will be the effect on the rate of interest? Click for List