What is the equilibrium interest rate

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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?

The demand for money is given by Md = $Y (0.3 - i), where $Y = 100 and the supply of money is $20.

a. What is the equilibrium interest rate?

b. What is the impact on the interest rate if central bank money is increased to $25?

Reference no: EM132405795

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