money demand interest rate
Question of the money demand Please Help!?
A person with a wealth of $ 100,000 and income of 60,000 $ Silver demand expressed in PY Md = (.25-i) What is the demand of the person for money if the interest rate is 6%? What is the demand for bonds? What wealth the person at the end of the year?
MD B + W = W = 100,000 PY Md = (0.25-i) i = 0.06 Y = 60,000 billion = 60'000P (0.25-0.06) = 11'400P 100,000 = 11'400P B + B = 100 '000 – 11'400P assuming P = 1 B = 100.000 – 11'400P = 100'000 – 11'400 = 88'600 ΔB = B * I = 88'600×0, 06 = +5'316 Assuming that all the money will (past) consumption (transaction) asked ΔW = TA = ΔB + ΔB + Y-Md = 5'316 +60'000-11'400 = +53'916 Assuming that income is added to the end of the year: W = W + ΔW ¹ ° = 100,000 +53'916 = 153'916 If the answer may vary depending on the frequency of income (the way it is distributed through years of testing, therefore, how it reinvested) and how money is spent (for consumption and some went back again) …
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