Homework #3 Week 11 Money Demand Problems (H 03) Due in BbLearn between Wednesday at 5 pm. and Friday at 10 pm. Carefully follow the protocol for your answers show with each question. Nin ll-in i n . r2 l 2 n r27 I in 1. If real income is $42,000 and k is 7.2%, what is the value of real money demand? [Express in dollars, rounded off to the nearest whole dollar, using a \"$" sign and a comma if the value is in the thousands.] 2. If Y (nominal income) is $45,000, and P (price level) is 3.3 and real money demand is $400, what is the value of k? [Express in percent terms and use the \"%" sign at the end of your answer, expressed to one decimal place.] 3. If real money demand is $2,100, k is 6.2%, and the price level is 2.1, what is the value of nominal income? [Express in dollars, rounded off to the nearest whole dollar, using a \"$\" sign and a comma if the value is in the thousands.] 4. You get paid $90,000 a year in equal installments every month. If you save 20% of your income (buying bonds, at al.) and spend the remainder in equal amounts over the course of each pay period, what is your real money demand? [Express in dollars, rounded off to the nearest whole dollar, using a \"$\" sign and a comma if the value is in the thousands.] 5. Extending from #4, assuming that each month is 30 days long. How much do you spend each day? [Express in dollars, rounded off to the nearest whole dollar, using a \"$" sign and a comma if the value is in the thousands.] 6. Extending from #4, remembering that you also have taxes to pay! [Ouchl] You have income tax of 26% and a monthly property tax of $150. Recalculate your real money demand. Note that your saving is made only after you have paid all your taxes; i.e., it is based on your after-tax income. [Express in dollars, rounded off to the nearest whole dollar, using a \"$\" sign and a comma if the value is in the thousands.] 7. Your income is $65,000 a year. Bonds earn 4.25% interest. Converting from bonds to cash costs $17 per transaction. Given the assumptions of the inventory model, what is the optimum number of cash conversions per year? [Express your number rounded off to one decimal place.] 8. Extending from #7, what is your money demand? Do not round off intermediate values. [Express in dollars, rounded off to the nearest whole dollar, using a \"$\" sign and a comma if the value is in the thousands] 9. Extending from #7, one year later increased productivity has resulted in your income rising to $78,000, but the cost of bond conversions have increased to $24 per transaction. Now what is the optimal number of conversions per year? [Express your number rounded off to one decimal place.]