Suppose the money demand function is M^D = P × [(0.25 × Y) ? (100 × i) ],
Where Y is expressed in billions of dollars and i is expressed in percentage points.If P = 2, Y = 5,000, and i = 5, then the nominal quantity of money demanded equals

Question

Quizplus · Accepted Answer

Substituting the given values into the money demand function:

MD = P × [(0.25 × Y) − (100 × i)]
MD = 2 × [(0.25 × 5,000) − (100 × 5)]
MD = 2 × [1,250 − 500]
MD = 2 × 750
MD = 1,500

Therefore, the nominal quantity of money demanded is 1,500.

Suppose the Money Demand Function Is MD = P ×

Suppose the Money Demand Function Is M^D = P ×