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Answer to Question #56932 in Other Economics for nidhi gambhir

Question #56932
Consider the following demand and supply model for money. Demand for Money: Mt to the power d=alpha0+alpha1yt+alpha2Rt+alpha3Pt+u1t
Supply of Money: Mt to the power s=beta 0+ beta1yt+u2t
Expert's answer
If the demand for Money is Mtd=alpha0+alpha1Yt+alpha2Rt+alpha3Pt+u1t and the supply of Money is Mts=beta 0+ beta1yt+u2t, then in equilibrium Md = Ms, so: alpha0+alpha1Yt+alpha2Rt+alpha3Pt+u1t = beta 0+ beta1yt+u2t.

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