Jump to content
Urch Forums

I am a newbie in Macroeconomics~ I need some help~


Kz Wong

Recommended Posts

[h=3]1)Sherman Peabody earns a monthly salary of $1,500, which he receives at the beginning of each month. He spends the entire amount each month at the rate of $50 per day. (Assume 30 days in a month.) The interest rate paid on bonds 10 % per month. It costs $4 every time Peabody sells bond.

 

  1. Describe briefly how Mr. Peabody should decide how much money to hold.
  2. Calculate Peabody’s optimal money holding. You can round to the nearest $0.50, and you need to consider only average money holding of more than $100
  3. Suppose the interest rate rises to 15 percent. Find the Peabody’s optimal money holding at this new interest rate. What will happen if the interest rate increases to 20 percent?
  4. Graph your answer to b. and c. with interest rate on the vertical axis and the amount of money demanded on the horizontal axis. Explain why your graph slopes downwards.

[/h]Someone help me~:blue:

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

×
×
  • Create New...