2024 – 5 Suppose that a person s wealth is 50 000 and that her yearly income is 60 000
Yearly Income – 2024
5. Suppose that a person’s wealth is $50,000 and that her yearly income is $60,000. Also suppose that her money demand func- tion is given by
Md = $Y (.35 – i )
a. Derive the demand for bonds. Suppose the interest rate increases by 10 percentage points. What is the effect on the demand for bonds?
b. What are the effects of an increase in wealth on the demand for money and the demand for bonds? Explain in words.
c. What are the effects of an increase in income on the demand for money and the demand for bonds? Explain in words.
d. Consider the statement “When people earn more money, they obviously will hold more bonds.” What is wrong with this statement?
Need assignment writing services that are 100% risk-free. Our writers are capable of providing the best assignment help to students in globally at best rates.
Assignment online is a team of top-class experts whose only goal is to give you the best assignment help service. Follow the link below to order now...
#write essay #research paper
