The money demand function is given by

𝑀
𝑑
=
𝑚
0
−
𝑚
1
𝑖
,

where
𝑚
0
=
7.5
,
𝑚
1
=
32
, and
𝑖
denotes the nominal interest rate.

The money supply is
𝑀
𝑠
=
$
5.3
. Calculate the nominal interest rate the clears the market for money.

Round your answer to the nearest tenth of a percent.

Question

The money demand function is given by

𝑀
𝑑
=
𝑚
0
−
𝑚
1
𝑖
,

where 
𝑚
0
=
7.5
, 
𝑚
1
=
32
, and 
𝑖
 denotes the nominal interest rate.

The money supply is 
𝑀
𝑠
=
$
5.3
. Calculate the nominal interest rate the clears the market for money.

Round your answer to the nearest tenth of a percent.

BlackTom AI · Accepted Answer

We’re given the money demand function Md = m0 − m1 i with m0 = 7.5, m1 = 32, and i the nominal interest rate. The money supply is Ms = 5.3. The market-clearing condition is Md = Ms, so set 7.5 − 32 i = 5.3. Subtract 5.3 from 7.5 to isolate the term containing i: 7.5 − 32 i − 5.3 = 0 → 2.2 − 32 i = 0. Next, solve for i by moving the constant term to the other side and dividing: −32 i = −2.2 → i = (−2.2)/(−32) = 2.2/32. Calculator check: 2.2 ÷ 32 ≈ 0.06875.

Convert to a percentage by multiplying by 100: 0.06875 × 100 ≈ 6.875%. Rounding to the nearest tenth of a percent gives 6.9%. The steps reflect straightforward algebra from the given linear money demand function to the market-clearing condition.

FA25 ECON 302 002 Homework #9 (Monetary Policy and Phillips Curve)

查看解析

登录即可查看完整答案

类似问题

The equilibrium rate of interest in the market for money is determined by the intersection of the

In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

Which of the following statement regarding cost is correct:

Under the assumptions used in cost-volume-profit analysis, as the activity increases:

The CVP and break-even analysis are supported by a range of important assumptions. Which of the following is not an assumption of the CVP:

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单