Question: Suppose the liquidity preference function is given by L(I,Y) = Y/8 - 1,000i Use the money demand equation, along with the following table of values,

Suppose the liquidity preference function is given by

L(I,Y) = Y/8 - 1,000i

Use the money demand equation, along with the following table of values, to calculate the velocity for each period.

Period2 Period3 Period4 Period5 Period6 Period7 Periodl 0.05 0.07 Interest rate 0.03 0.05 0.07 0.06 0.04

Period2 Period3 Period4 Period5 Period6 Period7 Periodl 0.05 0.07 Interest rate 0.03 0.05 0.07 0.06 0.04

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