It Is Assumed That Households and Businesses Want to Hold

question 58

Multiple Choice

It is assumed that households and businesses want to hold for transactions purposes an amount of money equal to one-half of the GDP.The table shows the amounts of money that households and businesses want to hold as an asset at various interest rates. Refer to the information above.If the GDP is $300 and the supply of money is $230, the equilibrium interest rate will be:

• A)8 percent.
• B)6 percent.
• C)2 percent.
• D)4 percent.

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Definitions:

Iron-Sulfur World

A theory regarding the origin of life on Earth, suggesting that life began at hydrothermal vents, where iron and sulfur compounds provided the energy and catalytic surfaces for the synthesis of organic molecules.

Hydrothermal Vents

Fissures in the deep ocean floor that release hot water and inorganic compounds.

Organic Molecules

Chemical compounds that contain carbon and are found in all living organisms, essential for life.

Organic Polymers

Large molecules composed of repeated subunits (monomers) that are typically carbon-based, like proteins, nucleic acids, and plastics.