Refer to the table for Moola below to answer the following questions. Money Supply Money Demand Interest
Question:
Refer to the table for Moola below to answer the following questions.
Money Supply | Money Demand | Interest Rate | Investment at Interest (Rate Shown) | Potential Real GDP | Actual Real GDP at Interest (Rate Shown) |
---|---|---|---|---|---|
$ 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 |
Instructions: Enter your answers as a whole number. a. What is the equilibrium interest rate in Moola? ___________percent b. What is the level of investment at the equilibrium interest rate? __________$ c. 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? ______________of $___________ d. Given money demand, by how much would the Moola central bank need to change the money supply to close the output gap? ___________________the money supply by $_____________ e. What is the expenditure multiplier in Moola? __________________
The graph below is an illustration of the aggregate demand-aggregate supply model.
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/6685937aa1aab_0746685937a8bd4a.jpg)