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 real quantity of money demanded equals

Question

Quizplus · Accepted Answer

The real quantity of money demanded is equal to M^D / P. Substituting the given values, we get:M^D / P = [(0.25 × Y) ? (100 × i)] / P= [(0.25 × 5,000) ? (100 × 5)] / 2= (1,250 ? 500) / 2= 750

Suppose the Money Demand Function Is MD = P ×

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