The demand for money is given by Md = $Y (0.3 - i), where $Y = 120 and the supply of money is $30. a. What is the equilibrium interest rate? b. If the central bank wants to decrease i by 2%, at what level should it set the supply of money?

What will be an ideal response?


a. i = 5%.
b. Ms = 32.4.

Economics

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Economics