a. Find the extra benefit of each additional $100 in money holdings and complete the table above Comparing the benefit with the opportunity cost, in terms of forgone interest, how much money will Uma hold on average if the nominal interest rate is 11 percent? 7 percent? 5 percent?

b. Graph Uma's money demand curve for interest rates of 5 percent, 7 percent, and 11 percent.

 

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The following table shows Uma's estimated annual benefits of holding different amounts of money: Average money Total benefit Extra benefit holdings ($) ($) ($) 500 35 600 47 700 57 800 65 900 71 1,000 75 1,100 77 1,200 77 The following table shows Uma's estimated annual benefits of holding different amounts of money: Average money Total benefit Extra benefit holdings ($) ($) ($) 500 35 600 47 700 57 800 65 900 71 1,000 75 1,100 77 1,200 77