Questions related to banking and GDP.
| Nominal Interest Rate |
Quantity Demanded of Money ($Billions) |
| 10% |
2 |
| 8% |
3 |
| 6% |
4 |
| 4% |
5 |
A. Using the above data, plot the demand curve and label it.
B. Suppose the Canada set the quantity of money at $ 4 Billion. Plot this on your graph from A. Label the supply curve MS and Equilibrium E.
C. Illustrate what is the Equilibrium interest rate?
D. Assume the Bank of Canada wants the nominal interest rate to be 4% per year. Shift the money supply in the appropriate direction to create a 4% nominal interest rate.
E. Label the new Supply of Money, MS2 and the new Equilibrium E2.
The table gives the components of Real GDP ($ Billions).