Answer the Question on the Basis of the Following Information

question 87

Multiple Choice

Answer the question on the basis of the following information.For transactions,households and businesses want to hold an amount of money equal to one-half of nominal GDP.The table shows the amounts of money they want to hold as an asset at various interest rates. $\begin{array}{l}\begin{array}{cc}\underline{\text { Interest Rate} } & \underline{\text { Amount of Money Demanded }}\\10 \% & \$ 20 \\8 & 40 \\6 & 60 \\4 & 80 \\2 & 100\end{array}\end{array}$ Refer to the given information.If nominal GDP is $300 and the supply of money is $230,the equilibrium interest rate will be:

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

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Definitions:

Knowledge Management

The process of creating, sharing, using, and managing the knowledge and information of an organization.

Accounting

Process of measuring, interpreting, and communicating financial information to support internal and external business decision making.

Risk-Return Trade-Off

The principle that potential return rises with an increase in risk, describing the balance between the desire for the lowest possible risk and the highest possible returns.