-The Above Table Has the Demand for Money Schedule

question 316

Essay

$\begin{array}{|c|c|}\hline\begin{array}{c}\text { Interest rate } \\\text { (percent per year) }\end{array} & \begin{array}{c}\text { Uantity of money } \\\text { demanded (trillions } \\\text { of } 2005 \text { dollars) }\end{array} \\\hline 3 & 2.0 \\\hline 4 & 1.5 \\\hline 5 & 1.0 \\\hline 6 & 0.5 \\\hline\end{array}$
-The above table has the demand for money schedule.
a) If the Fed sets the quantity of money equal to $1.0 trillion, what is the equilibrium interest rate?
b) If the Fed wants the interest rate to be 4 percent, what must it do?

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Definitions:

Reservation

The act of keeping something, such as a right or property, specifically withheld or protected from being given up or used.

Lien

A legal right or interest that a lender has in the borrower’s property, granted until a debt owed by the borrower is paid off.

Real Property

Real Property entails land and anything permanently affixed to it, such as buildings, in contrast to personal property or chattels.

Taxes Assessed

The determination and assignment of the value for tax purposes on property, income, or other taxable assets.