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(Solved): Suppose the liquidity preference function is given by: Y L(i,Y)= - 1,100i 10 Calculate velocity fo ...
Suppose the liquidity preference function is given by: Y L(i,Y)= - 1,100i 10 Calculate velocity for each period, using the money demand equation: Y V= L(i, 1) along with the following table of values. (Round your responses to two decimal places.) Period 1 Period 4 Y in billions) Interest rate Velocity 12,200 0.04 Period 2 12,600 0.06 Period 3 12,350 0.03 12,500 0.06 Period 5 12,700 0.07 Period 6 13,100 0.04 Period 7 13,200 0.08
Expert Answer
Given that:- Liquidity preference function is given by:- Money demand equation:- Answer:- For to calculation of velocity we need to find the value for L that is Liquid Preferences for each period by equating the values in the given functions:- Now by