To be consulted sqib bhai plz

(a) To find the equilibrium level of the real interest rate, we need to determine the demand for and supply of loans. Since each lender wishes to save 10 goods, and there are 200 lenders, the total supply of loans is equal to (200) (10) = 2000 goods, independent of the real interest rate. There are 100 borrowers, each of who desire to 10/r goods each. This implies the total demand for loans is (100)(10/r) = 1000/r. We require that the market for loans clears:
Total loan supply = Total loan demand

2000 = 1000/r
r^∗      = 1000/20000 = 0.5

At this real interest rate, the market for loans clears. The total amount of goods lent (L^∗) is 2000 goods. The equilibrium in the market for loans is illustrated in Figure 7C.

(b) Because the population is constant, the rate of return on fiat money is equal to 1/z = 1/0.5 = 2. This rate of return is higher than the market-clearing real interest rate in the market for IOUs. No lender would be willing to make a loan at a lower rate of return than that which can be received by holding fiat money. At a real interest rate of 2, however, the typical borrower only wants to borrow 10/r = 10/2 = 5 goods. In the aggregate, total borrowing is (100) (5) = 500 goods. Lenders wish to lend a total of 2000 goods. The difference, 1500 goods, is held by lenders in the form of fiat money. Because there are 200 lenders, the typical lender holds fiat money balances worth 1500/200 = 7.5 goods.