Suppose that the Money Supply is currently at $13,000, and that Money Demand is given by: MD= 23,000 - 2,000r where r is the interest rate, and for the purposes of the functional form above, if the interest rate = 8%, the r = 8 for derterming MD. Suppose that we start in equilibrium in the money market and the Central Bank targets the interest rate. If the Central Bank raises the interest rate by 2%, then how large will the surplus in the Money Market be if the Central Bank does not adjust the Money Supply (MS)? Note: round your answer to two decimal places. Also, if the answer is $2,678 for example, input this as 2678.00
Suppose that the Money Supply is currently at $13,000, and that Money Demand is given by: MD= 23,000 - 2,000r where r is the interest rate, and for the purposes of the functional form above, if the interest rate = 8%, the r = 8 for derterming MD. Suppose that we start in equilibrium in the money market and the Central Bank targets the interest rate. If the Central Bank raises the interest rate by 2%, then how large will the surplus in the Money Market be if the Central Bank does not adjust the Money Supply (MS)? Note: round your answer to two decimal places. Also, if the answer is $2,678 for example, input this as 2678.00
Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781305971509
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Influence Of Monetary And Fiscal Policy On Aggregate Demand
Section: Chapter Questions
Problem 5CQQ
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