Y5

This question asks about Money Demand. Suppose that the supply of credit cards is given by q=1400X. Further suppose that the nominal interest rate is R=0.1. Answer the following questions about this:

If Y=100,P=20, what is the value of X?

If the price level increases to P=30, what happens to the quantity of money demanded (CAREFUL: asking for quantity of money demanded, NOT X). Also draw this change graphically.

If real GDP decreases to Y=90, what happens to the quantity of money demanded (CAREFUL: asking for quantity of money demanded, NOT X). Also draw this change graphically.