ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Answer to 2 decimal digits
Using the data in the table below, answer the following questions. (Hint:
draw a graph when possible)
Money Demand
Interest Rate%
(billions of
dollars)
16
160
15
180
14
200
13
220
12
260
11
320
10
380
9
460
8
560
Assume that the money supply is equal to 220 (do not use % signs in
your answers)
Part 1: What is the equilibrium rate of interest? Number
Part 2: Assume that the Bank of Canada buys bonds and increases the
money supply to 380 What is the equilibrium rate of interest? Number
Part 3: A fall in income causes the demand for money to
Click for List
by 60 billion. If the money supply is 140, what
is the equilibrium rate of interest? Number
Part 4: Assuming the change in part 3, if money supply is 400, what is the
equilibrium rate of interest? Number
Part 5: An increase in income causes the transaction demand for money to
Click for List
by 40 billion at each interest rate. (Assume the
change in part 3 did not occur. Given a money supply of 220, what is the
equilibrium rate of interest? Number
Part 6: Given the change in part 5, if money supply is 360, what is the
equilibrium rate of interest? Number
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Transcribed Image Text:Using the data in the table below, answer the following questions. (Hint: draw a graph when possible) Money Demand Interest Rate% (billions of dollars) 16 160 15 180 14 200 13 220 12 260 11 320 10 380 9 460 8 560 Assume that the money supply is equal to 220 (do not use % signs in your answers) Part 1: What is the equilibrium rate of interest? Number Part 2: Assume that the Bank of Canada buys bonds and increases the money supply to 380 What is the equilibrium rate of interest? Number Part 3: A fall in income causes the demand for money to Click for List by 60 billion. If the money supply is 140, what is the equilibrium rate of interest? Number Part 4: Assuming the change in part 3, if money supply is 400, what is the equilibrium rate of interest? Number Part 5: An increase in income causes the transaction demand for money to Click for List by 40 billion at each interest rate. (Assume the change in part 3 did not occur. Given a money supply of 220, what is the equilibrium rate of interest? Number Part 6: Given the change in part 5, if money supply is 360, what is the equilibrium rate of interest? Number
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