Question: Hi, I need help with this : Question 4 [8 points] The gures below show the demand for money and the money market. E 3
Hi, I need help with this :
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Question 4 [8 points] The gures below show the demand for money and the money market. E 3 E E E E 31 31 E E "6 "6 o o E E 30 60 90 Amount of money demanded (billions of dollars) Amount of money demanded (billions of dollars) a) Plot the total demand for money (by plotting at least 2 points) and the equilibrium interest rate V Total Demand For Money Line g a a) 3 .J in 1' n) a .L: '5 c) 0 ' '3'0 60 90 130 130 10 zlo' 210 270 ' W Amount of money demanded (billions of dollars) b) In this graph, at the interest rate ie: 0 The amount of money demanded for assets is $100 billion 0 The amount of money demanded for transactions is $80 billion 0 The amount of money demanded for transactions is $60 billion 0 $80 billion is demanded for transactions, $100 billion is demanded for assets, and the money supply is $180 billion c) Suppose the supply of money declines by $100 billion. The equilibrium interest rate would : 0 fall, the amounts of money demanded for transactions would be unchanged, and the amount of money demanded for assets would rise 0 rise, the amount of money demanded for transactions would be unchanged, and the amount of money demanded for assets would decline 0 fall, and the amounts of money demanded both for transactions and for assets would increase 0 fall, the amount of money demanded for transactions would rise, and the amount of money demanded for assets would decline
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