Suppose that money demand is given by where $Y is $100. Also, suppose that the supply of

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Suppose that money demand is given by

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where $Y is $100. Also, suppose that the supply of money is $20.

a. What is the equilibrium interest rate?

b. If the Federal Reserve Bank wants to increase the equilibrium interest rate i by 10 percentage points from its value in part a, at what level should it set the supply of money?

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Macroeconomics

ISBN: 9780134897899

8th Edition

Authors: Olivier Jean Blanchard

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Question Posted: Mar 11, 2024 03:00 AM

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Suppose that money demand is given by where $Y is $100. Also, suppose that the supply of

Question:

Md = $Y(0.25 -1)

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Macroeconomics

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