Assume the equation for the total demand for money is L = .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

Question

Quizplus · Accepted Answer

The amount of money demanded is L = .4Y + 80 - 4i = .4(200) + 80 - 4(10) = 120.

Assume the Equation for the Total Demand for Money Is