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Suppose the total demand for money is described by the following equation

Suppose the total demand for money is described by the following equation
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FINANCE

FIN 350 Module 2: Assignments

Chapter 5 Problems and Issues 6

6. Suppose the total demand for money is described by the following equation:

MD = 30 - 2i

where i is the prevailing market interest rate. The total supply of money is described by the equation:

MS = 3 + 7i

According to liquidity preference what is the equilibrium interest rate?

 

FILE: MS WORD

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