Jason has wealth of \(\$ 100,000\) that he invests entirely in money (a checking account) and government bonds. Jason instructs his broker to invest \(\$ 50,000\) in bonds, plus \(\$ 5000\) 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 Jason's demand for money as a function of bond and checking account interest rates.

b. Write an algebraic formula that gives Jason's 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 Jason. 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?