
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
Answer to 2 decimal digits

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
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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
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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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