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Calculate the equilibrium price level in the economy

Assignment Help Macroeconomics
Reference no: EM132476497

Problem: Suppose the following table represents the money demand for various price levels:

Md 1/ P

7000 3

5000 5

2000 8

(a) Calculate the linear money demand function (Md = a - b 1 P ) function.

(b) Assume that the supply of money is Ms = $6000. Calculate the equilibrium price level in the economy. Draw a graph representing the equilibrium in the money market with the value of money in the y-axis.

Reference no: EM132476497

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