It is assumed that households and businesses want to hold for transactions purposes an amount of money equal to one-half of the GDP. The table shows the amounts of money that households and businesses want to hold as an asset at various interest rates. Refer to the information above. If the GDP is $200 and the interest rate is 6, what total amount of money will households and businesses want to hold?

Question

It is assumed that households and businesses want to hold for transactions purposes an amount of money equal to one-half of the GDP. The table shows the amounts of money that households and businesses want to hold as an asset at various interest rates.  Refer to the information above. If the GDP is $200 and the interest rate is 6, what total amount of money will households and businesses want to hold?

Quizplus · Accepted Answer

According to the assumption given in the question, households and businesses want to hold an amount of money equal to half of the GDP, which is $200/2 = $100.
Using the table, we can see that at an interest rate of 6%, households and businesses want to hold a combined total of $160.
Therefore, the answer is C, $160.

It Is Assumed That Households and Businesses Want to Hold