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?
A)$120
B)$140
C)$160
D)$180

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?
A)$120 
B)$140 
C)$160 
D)$180

Quizplus · Accepted Answer

If households and businesses want to hold an amount of money equal to one-half of the GDP and the GDP is $200, then they want to hold $100 ($200/2). From the table, we see that at an interest rate of 6, households want to hold $80 and businesses want to hold $80. Adding these together gives a total of $160. Therefore, the correct answer is C.

It Is Assumed That Households and Businesses Want to Hold