In: Economics
PLEASE ANSWER FAST I NEED TO KNOW HOW TO SOLVE THIS
Assume that the following conditions exist. a. All banks are fully loaned up-there are no excess reserves, and desired excess reserves are always zero. b. The money multiplier is 5. c. The planned investment schedule is such that at a 6 percent rate of interest, investment is $1200 billion; at 5 percent, investment is $1220 billion. d. The investment multiplier is 4. e. The initial equilibrium level of real GDP is $12.00 trillion. f. The equilibrium rate of interest is 6 percent. Now the Fed engages in expansionary monetary policy. It buys $2 billion worth of bonds, which increases the money supply, which in turn lowers the market rate of interest by 1 percentage point. Calculate the increase in money supply: $____billion. Calculate the increase in real GDP: $____billion. Calculate the new equilibrium real GDP: $____trillion.
please explain the math for me to understand