Question
1. In a city in a developed country, the money supply is $250 million at a rate of 20 times the velocity of money. If
1. In a city in a developed country, the money supply is $250 million at a rate of 20 times the velocity of money. If the market price of the good is $5,000 per unit, what is the quantity of the good sold in the market?
2. The following macroeconomic data are known: Money supply : MS = 180 Consumption function : C = 150 + 0.5 Yd Cash demand for speculation : M2 = 50 - 100 i Cash demand for transactions and precautionary measures : M1 = 0.25 Y Private sector investment : I = 200 - 400 i Question: a. How much national income (Y) and the equilibrium interest rate (i) guarantee a balance in both the goods market and the money market! b. Determine the amount of consumption (C) in the equilibrium state! c. Determine the amount of savings (S) of the community in this equilibrium state! d. Determine the magnitude of the demand for money for speculation in the equilibrium state! e. Determine the size of the private sector investment in the equilibrium state!
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