Use the Table Below to Answer the Questions

question 2

Essay

Use the table below to answer the questions. (a) If the transactions demand for money equals 10% of nominal GDP, nominal GDP is $600 billion, and the money supply is $360 billion, what is the equilibrium interest rate?
(b) If nominal GDP remains constant, and the money supply is increased from $360 to $460 billion, what will the equilibrium rate of interest be?

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Definitions:

Operating Performance

A measurement of a firm's efficiency, effectiveness, and overall management's success in generating profits from operations.

Contribution Margin

The amount by which sales revenue exceeds variable costs of production, indicating how much contributes to covering fixed costs and generating profit.

EBIT

A financial indicator, Earnings Before Interest and Taxes, reflects a company's earnings by removing the effects of interest and tax expenses.

Fixed Costs

Costs that do not change with the level of output or sales in the short term.