What is the equilibrium interest rate in trance

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Reference no: EM131170885

Assume that the following data characterize the hypothetical economy of Trance: money supply = $210 billion; quantity of money demanded for transactions = $150 billion; quantity of money demanded as an asset = $10 billion at 12 percent interest, increasing by $10 billion for each 2-percentage-point fall in the interest rate.

a. What is the equilibrium interest rate in Trance? _____%

b. At the equilibrium interest rate, what are the quantity of money supplied, the total quantity of money demanded, the amount of money demanded for transactions, and the amount of money demanded as an asset in Trance?

Instructions: Enter only whole numbers for your answers below.

Quantity of money supplied = $ _______

Quantity of money demanded = $ _______

Amount of money demanded for transactions = $ ________

Reference no: EM131170885

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