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 $200 and the interest rate is 6, what total amount of money will households and businesses want to hold?

Question

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 $200 and the interest rate is 6, what total amount of money will households and businesses want to hold?

Quizplus · Accepted Answer

According to the assumption, households and businesses want to hold an amount of money equal to one-half of the GDP, which would be $100. 
Referring to the table, at an interest rate of 6%, they want to hold $80. 
Therefore, the total amount of money they want to hold would be $100 + $80 = $180. 
The correct answer is (D).

It Is Assumed That Households and Businesses Want to Hold