2. Suppose that Md = -80i + 0.7Y and that BSP fixes Ms at Php50 B and the national income is to be achieved at P80B. A. Determine the equilibrium interest rate and equilibrium quantity of money that is desirable so as not to cause any surplus or shortage of money. Show supporting calculation. B. Illustrate in a graph the money demand and supply and highlight the equilibrium point.

2. Suppose that Md = -80i + 0.7Y and that BSP fixes Ms at Php50 B and the national income is to be achieved at P80B. A. Determine the equilibrium interest rate and equilibrium quantity of money that is desirable so as not to cause any surplus or shortage of money. Show supporting calculation. B. Illustrate in a graph the money demand and supply and highlight the equilibrium point.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Monetary System

Section: Chapter Questions

Problem 8PA

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2. Suppose that Md = –80i + 0.7Y and that BSP fixes Ms at Php50 B and the nationalincome is to be achieved at P80B.A. Determine the equilibrium interest rate and equilibrium quantity of money that isdesirable so as not to cause any surplus or shortage of money. Show supportingcalculation.B. Illustrate in a graph the money demand and supply and highlight the equilibriumpoint.
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