(Advanced Analysis) Assume the Equation for the Total Demand for Money

question 245

Multiple Choice

(Advanced analysis) Assume the equation for the total demand for money is L = 0.4Y + 80 - 4i, where L is the amount of money demanded, Y is gross domestic product, and i is the interest rate.If gross domestic product is $200 and the interest rate is 10 (percent) , what amount of money will society want to hold?

• A)$200
• B)$120
• C)$320
• D)$160

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Definitions:

Receivables Turnover

A measure of a company's efficiency in collecting its sales on credit, calculated by dividing sales by average accounts receivable.

Payables Turnover

A financial ratio that measures how quickly a company pays its suppliers by comparing net credit purchases with the average accounts payable over a period.

Cash Cycle

The period it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, often used to assess the efficiency of inventory management.