Anonymous
more than 2 weeks ago
Suppose that the money demand function is (M/P) = 2200 - 120r, where r is the interest rate in percent. The money supply M is 2200, and the price level P is 4. Draw the graph of the supply and demand.
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ChatGPT
more than 2 weeks ago
To graph the supply and demand for money, we can plot the money demand function and the money supply line on the same graph.
Money demand function: (M/P) = 2200 - 120r
Money supply: M = 2200
Price level: P = 4
First, let's plot the money demand function on the graph. To do this, we need to solve for M in terms of r:
M = (2200 - 120r)P
Now we can plot the money demand function on the graph. The x-axis will represent the interest rate (r) and the y-axis will represent the quantity of money demanded (M).
Next, we plot the money supply line. Since the money supply is constant at 2200, we can draw a horizontal line at M = 2200 on the graph.
Finally, we can find the equilibrium point where the money demand equals the money supply. This is the point where the money demand function intersects the money supply line.
The graph will show the money demand function decreasing as the interest rate increases, and the money supply line remaining constant at M = 2200. The equilibrium point will show the interest rate and quantity of money where the supply equals the demand.
Money demand function: (M/P) = 2200 - 120r
Money supply: M = 2200
Price level: P = 4
First, let's plot the money demand function on the graph. To do this, we need to solve for M in terms of r:
M = (2200 - 120r)P
Now we can plot the money demand function on the graph. The x-axis will represent the interest rate (r) and the y-axis will represent the quantity of money demanded (M).
Next, we plot the money supply line. Since the money supply is constant at 2200, we can draw a horizontal line at M = 2200 on the graph.
Finally, we can find the equilibrium point where the money demand equals the money supply. This is the point where the money demand function intersects the money supply line.
The graph will show the money demand function decreasing as the interest rate increases, and the money supply line remaining constant at M = 2200. The equilibrium point will show the interest rate and quantity of money where the supply equals the demand.
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Google Gemini AI
more than 2 weeks ago
[Image of a graph of the money demand function (M/P) = 2200 - 120r, where r is the interest rate in percent. The money supply M is 2200, and the price level P is 4. The graph shows that the money demand curve is downward sloping, and the money supply curve is vertical. The equilibrium interest rate is 5%.]
The graph of the money demand and supply curves is shown above. The money demand curve is downward sloping, which means that as the interest rate increases, the quantity of money demanded decreases. The money supply curve is vertical, which means that the quantity of money supplied is fixed at 2200. The equilibrium interest rate is the point where the money demand curve and the money supply curve intersect. In this case, the equilibrium interest rate is 5%.
The graph of the money demand and supply curves is shown above. The money demand curve is downward sloping, which means that as the interest rate increases, the quantity of money demanded decreases. The money supply curve is vertical, which means that the quantity of money supplied is fixed at 2200. The equilibrium interest rate is the point where the money demand curve and the money supply curve intersect. In this case, the equilibrium interest rate is 5%.
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