Question 32 The Bank of Canada has set money supply (MS) at $20B and the total demand for money, Md=Dt+Da, is given. Not yet answered Money Market Investment Market Marked out of 7.00 MS Flag 5 question 4 4 W i-rate (%) i-rate (%) 3 N Md ON 10 20 30 40 50 60 0 40 80 120 160 200 240 Money ($b) Investment ($b) What is the equilibrium interest rate? Based upon this interest rate, how much gross private domestic investment (I) would there be? + The Canadian economy is in equilibrium in the Keynesian range of the SRAS curve at $40B (without I) and the expenditure multiplier is 2. If gross private domestics investment (I) was added into the economy, determine the new GDPe. Suppose, the Bank of Canada has determined that GDPf is $200B. Compared to the new GDPe, what type of gap is Canada experiencing? Calculate the new total gross private domestic investment (I) that would cause Canada's GDPe to increase from $40B (without I) to GDPf? + Determine the new interest rate that will achieve this level of gross private domestic investment (1). In order to change the interest rate, determine the BOC's new level of money supply (MS)