Multiple Choice
Suppose the real money demand function is
Md/P = 2400 + 0.2 Y - 10,000 (r + ?e) .
Assume M = 5000,?e = .03,and Y = 5000.If the price level were to decrease from 2.5 to 2.0,then the real interest rate would decrease by how many percentage points (assuming Md/,?e,and Y are unchanged) ?
A) 4
B) 5
C) 9
D) 14
Correct Answer:
Verified
Correct Answer:
Verified
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