Suppose, the aggregate demand for money-holding is L = 0.25Y - 100i, where Y is the real GDP and i is the interest rate. In this equation:
A) the real money balance fraction for the purpose of transactions and precautionary reasons is 100.
B) the real money balance fraction for the purpose of transactions and precautionary reasons is 0.25.
C) the real money balance fraction for the purpose of transactions and precautionary reasons is 0.25(100) .
D) the real money balance fraction for the purpose of transactions and precautionary reasons is 1/0.25.
Correct Answer:
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