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03-25-2008, 12:24 PM
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| economics about gdp?
Does anyone know how the interest rate and the real gdp depending one on each other? Because I'm doing my homework and that what they ask me: Consider the following money demand function: M d = 500 - 20i where M d is the quantity of money demanded (in billions of dollars), and i is the interest rate in percentage. For example, i = 2 means the interest rate is 2%. The supply of money is $400 billion. The aggregate expenditure function in billions of dollars is AE = 1000 + 0.8Y a. Compute the equilibrium interest rate in the money market and find the equilibrium real GDP. I found that the equilibrium interest rate is 5%. Now I have to find the equilibrium real GDP, but I don't know how. Please help      |
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