Suppose that the economy of Motherwell,depicted in the following table is a closed (no foreign trade),private (no government)economy.Assume that initially the money supply is $170.
a)What are the values of equilibrium values of interest rate and GDP?
b)If the interest rate is 8 percent,is there a surplus or shortage of money?
c)If the interest rate is 7 percent and GDP is $1000 is there a surplus or shortage of goods and services? How much?
d)If the money supply is decreased to $150,what are the new values of equilibrium values of interest rate and GDP?
e)If the full-employment level of GDP is $900,what must be the level of the money supply to produce this level of GDP?

Question

Suppose that the economy of Motherwell,depicted in the following table is a closed (no foreign trade),private (no government)economy.Assume that initially the money supply is $170.
  a)What are the values of equilibrium values of interest rate and GDP?
b)If the interest rate is 8 percent,is there a surplus or shortage of money?
c)If the interest rate is 7 percent and GDP is $1000 is there a surplus or shortage of goods and services? How much?
d)If the money supply is decreased to $150,what are the new values of equilibrium values of interest rate and GDP?
e)If the full-employment level of GDP is $900,what must be the level of the money supply to produce this level of GDP?

Quizplus · Accepted Answer

The Answer of Suppose that the economy of Motherwell,depicted in the following table is a closed (no foreign trade),private (no government)economy.Assume that initially the money supply is $170.
  a)What are the values of equilibrium values of interest rate and GDP?
b)If the interest rate is 8 percent,is there a surplus or shortage of money?
c)If the interest rate is 7 percent and GDP is $1000 is there a surplus or shortage of goods and services? How much?
d)If the money supply is decreased to $150,what are the new values of equilibrium values of interest rate and GDP?
e)If the full-employment level of GDP is $900,what must be the level of the money supply to produce this level of GDP?

Suppose That the Economy of Motherwell,depicted in the Following Table