Which of the following statements is true? Seled one OA Ahigher level of income causes the demand for money at each interest rate to increase and the demand curve to shit to the left 08 As the interest rate on bonds increases, the opportunity cost of holding money decreases Oc. the markat for money is in equilibrium, then the bond market is in disequlibrum. A one-tme increase in the money supply will cause prices to rise and the interest rate wil rise consequerity

Which of the following statements is true? Seled one OA Ahigher level of income causes the demand for money at each interest rate to increase and the demand curve to shit to the left 08 As the interest rate on bonds increases, the opportunity cost of holding money decreases Oc. the markat for money is in equilibrium, then the bond market is in disequlibrum. A one-tme increase in the money supply will cause prices to rise and the interest rate wil rise consequerity

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter15: Monetary Theory And Policy

Section: Chapter Questions

Problem 1.1P

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Suppose that wealth is $5trn and can be in money and bonds only. Suppose that yearly income is $1.5trn. Also, suppose that money demand function is given by Md = $Y (.8 - 2i) a. What is the demand for money and the demand for bonds when the interest rate is 2% (i=0.02)? 4% (i=0.04)?
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