Mr. Midas has wealth of $100,000 that he invests entirely in money (a checking account) and government bonds. Mr. Midas

[answerhappygod]

Mr. Midas has wealth of $100,000 that he invests entirely in
money (a checking account) and government bonds. Mr. Midas
instructs his broker to invest $50,000 in bonds, plus $5,000 more
in bonds for every percentage point that the interest rate on bonds
exceeds the interest rate on his checking account.
a. Write an algebraic formula that gives Mr. Midas’ demand for
money as a function of bond and checking account interest
rates.
b. Write an algebraic formula that gives Mr. Midas’ demand for
bonds. What is the sum of his demand for money and his demand for
bonds?
c. Suppose that all holders of wealth in the economy are
identical to Mr. Midas. Fixed asset supplies per person are $80,000
of bonds and $20,000 of checking accounts. Checking accounts pay no
interest. What is the interest rate on bonds in asset market
equilibrium?