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If the supply of real balances is 300, and the gross domestic product is 90, then the equilibrium interest rate is

Sagot :

Baraq

Suppose that the demand for real balances is (M / P)d = (5Y) - (20r). If the supply of real balances is 300, and the gross domestic product is 90, then the equilibrium interest rate is

Answer:

7.5

Explanation:

Given that (M / P)d = (5Y) - (20r).

Where supply of real balances is 300

The gross domestic product is 90

Hence we have 300 = (5Y) - (20r)

Therefore, we have 300 = (5×90) - (20r)

=> 300 = 450 - 20r

=> 20r = 450 - 300

=> 20r = 150

=> r = 150 ÷ 20

=> r = 7.5

Therefore, in this case, the correct answer to the question is that the equilibrium interest rate is 7.5

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