Below is some data concerning the money market?

-Refer to the information above to answer this question.If the transactions demand for money is 10 percent of national income and the supply of money is $135 then what would be the equilibrium interest rate?

Question

Below is some data concerning the money market?
 
-Refer to the information above to answer this question.If the transactions demand for money is 10 percent of national income and the supply of money is $135 then what would be the equilibrium interest rate?

Quizplus · Accepted Answer

The equilibrium interest rate can be found by equating the transactions demand for money (10% of national income) with the supply of money ($135). 
10% of national income = $135
National income = $1350 (since 10% of N = 0.1N = $135)
Equilibrium interest rate = (1/10) x 100 = 10%
Therefore, the equilibrium interest rate would be 6% (as it is 10% divided by 1.67).

Below Is Some Data Concerning the Money Market