Home » Question 1: Money demand in an economy is Md/P = 500 + 0.2Y – 1000i. (3 marks) You know that P = 100, Y = 1000, and i = 0. Find real money demand,…

# Question 1: Money demand in an economy is Md/P = 500 + 0.2Y – 1000i. (3 marks) You know that P = 100, Y = 1000, and i = 0. Find real money demand,…

Question 1: Money demand in an economy is Md/P = 500 + 0.2Y – 1000i.a. (3 marks) You know that P = 100, Y = 1000, and i = 0.10. Find real money demand, nominal money demand, and velocity.b. (3 marks) The price level doubles from P = 100 to P= 200. Find real money demand, nominal money demand, and velocity.c. (3 marks) Starting from the values given in part (a) and assuming that the money demand function as written holds, determine how velocity is affected by an increase in real income, by an increase in the nominal interest rate, and by an increase in the price level.Question 2: Mr. Midas has wealth of \$100,000 that he invests entirely in money (a chequing account) and government bonds. He instructs his banker to invest \$50,000 in bonds, plus \$5,000 more in bonds for every percentage point that the interest rate on bonds exceeds the interest rate on his chequing account.a. (2 marks) Write an algebraic formula that gives Mr. Midas’ demand for money as a function of bond and chequing account interest rates.b. (2 marks) Write an algebraic formula that gives Mr. Midas’ demand for bonds. What is the sum of his demand for money and his demand for bonds?c. (2 marks) Suppose that all holders of wealth in the economy are similar to Mr. Midas. Fixed asset supplies per person are \$80,000 of bonds and \$20,000 of chequing accounts. Chequing accounts now pay no interest. What is the interest rate on bonds in asset market equilibrium?*

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.