$$\begin{array} { | c | c | c | c | }
\hline \text { Interest Rate } & \begin{array} { c }
\text { Transactions Demand for } \
\text { Money }
\end{array} & \text { Asset Demand for Money } & \text { Money Supply } \
\hline 2 \% & \$ 220 & \$ 300 & \$ 460 \
\hline 4 & 220 & 280 & 460 \
\hline 6 & 220 & 260 & 460 \
\hline 8 & 220 & 240 & 460 \
\hline 10 & 220 & 220 & 460 \
\hline
\end{array}$$ Based on the given table, the equilibrium interest rate is
A) 2 percent.
B) 4 percent.
C) 6 percent.
D) 8 percent.

Question

$$\begin{array} { | c | c | c | c | } 
\hline \text { Interest Rate } & \begin{array} { c } 
\text { Transactions Demand for } \
\text { Money }
\end{array} & \text { Asset Demand for Money } & \text { Money Supply } \
\hline 2 \% & \$ 220 & \$ 300 & \$ 460 \
\hline 4 & 220 & 280 & 460 \
\hline 6 & 220 & 260 & 460 \
\hline 8 & 220 & 240 & 460 \
\hline 10 & 220 & 220 & 460 \
\hline
\end{array}$$ Based on the given table, the equilibrium interest rate is
A) 2 percent.
B) 4 percent.
C) 6 percent.
D) 8 percent.

Quizplus · Accepted Answer

The equilibrium interest rate is where the total demand for money (transactions demand + asset demand) equals the money supply. At 8%, the transactions demand ($220) plus the asset demand ($240) equals the money supply ($460).

Based on the Given Table, the Equilibrium Interest Rate Is