Question 1

Using the data in the table below, answer the following questions. (Hint: draw a graph when possible)

Interest Rate%	Money Demand (billions of dollars)
11	140
10	160
9	180
8	200
7	240
6	300
5	360
4	440
3	540

Assume that the money supply is equal to 200 (do not use % signs in your answers)

Part 1: What is the equilibrium rate of interest?____________

Part 2: Assume that the Bank of Canada buys bonds and increases the money supply to 360 What is the equilibrium rate of interest?____________

Part 3: A fall in income causes the demand for money to __________ by 60 billion. If the money supply is 120, what is the equilibrium rate of interest?____________

Part 4: Assuming the change in part 3, if money supply is 380, what is the equilibrium rate of interest?____________

Part 5: An increase in income causes the transaction demand for money to __________by 40 billion at each interest rate. (Assume the change in part 3 did not occur. Given a money supply of 200, what is the equilibrium rate of interest?____________

Part 6: Given the change in part 5, if money supply is 340, what is the equilibrium rate of interest? ____________

Question 2

Using the following table, calculate the missing exchange rates:

Country	Currency	Price of one unit of foreign currency in Canadian dollars	Price of one Canadian dollar in terms of foreign currency
U.S.A.	Dollar	1.4925	____________
Britain	Pound	____________	0.4
France	Euro	0.1825	____________
Japan	Yen	____________	121.0825
Mexico	Peso	0.023