3. Refer to the table for Moola at the bottom of this page to answer the following questions. What is the equilibrium interest rate in Moola? What is the level of investment at the equilibrium interest rate? Is there either a recessionary output gap (negative GDP gap) or an inflationary output gap (positive GDP gap) at the equilibrium interest rate and, if either, what is the amount? Given money demand, by how much would the Moola central bank need to change the money supply to close the output gap? What is the expenditure multiplier in Moola? LO4

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Money Money Money Investment Interest at Interest Potential Actual Real GDP at Interest (Rate Shown) Real GDP (Rate Shown) Supply Demand Rate $500 $800 2% $50 $350 $390 500 700 3 40 350 370 500 600 4 30 350 350 500 500 5 20 350 330 500 400 6 10 350 310