Use the graph below to answer the following questions.Dt is the transactions demand for money, Dm is the total demand for money, and Sm is the supply of money. (a) What is the transactions demand for money in this market?
(b) What is the asset demand for money if the interest rate is 4%?
(c) If the money market is in equilibrium at 6%, describe the change that must occur for the equilibrium rate to change to 4%.(d) If the money market is in equilibrium at 6% and the money supply has increased to Sm3, by how much has total demand for money changed?

Question

Use the graph below to answer the following questions.Dt is the transactions demand for money, Dm is the total demand for money, and Sm is the supply of money.  (a) What is the transactions demand for money in this market?
(b) What is the asset demand for money if the interest rate is 4%?
(c) If the money market is in equilibrium at 6%, describe the change that must occur for the equilibrium rate to change to 4%.(d) If the money market is in equilibrium at 6% and the money supply has increased to Sm3, by how much has total demand for money changed?

Quizplus · Accepted Answer

The Answer of Use the graph below to answer the following questions.Dt is the transactions demand for money, Dm is the total demand for money, and Sm is the supply of money.  (a) What is the transactions demand for money in this market?
(b) What is the asset demand for money if the interest rate is 4%?
(c) If the money market is in equilibrium at 6%, describe the change that must occur for the equilibrium rate to change to 4%.(d) If the money market is in equilibrium at 6% and the money supply has increased to Sm3, by how much has total demand for money changed?

Use the Graph Below to Answer the Following Questions