Question: Consider the money demand function that takes the form ( M / P ) d = Y / (4 i ), where M is the

Consider the money demand function that takes the form (M/P)^d=Y/ (4i), whereMis the quantity of money,Pis the price level,Yis real output, andiis the nominal interest rate.

What is thenominal interest rateithat will ensure equilibriumIfM=$1,000,P=$10,andY=$2,500?

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