Derieve the demand for bonds.

Md=$Y(.35-i)
Person's wealth is $50,000
Yearly Income is $60,000

I really have to idea on how to derieve the demand. Should I just put in the income($60,000) at $Y and solve the equation?

Daang, I thought my math was hard.
I don't know but wish you the BEST of luck.

Bill, I think you need more information. I presume your i is interest rate, which is missing.

They didn't give what the interest rate is. Would the equation then be Md=21000-60000i?

The Md equation is the demand for money. You are expected to derive the demand for bonds from this. The two are closely related. I would say:

Bd = $Y(ai)

where a > 0, because demand for bonds increases with the interest rate.

Well, if the equation for the demand for money is Md = $Y(0.35 - i), we can try to derive the demand for bonds from this. Let's call it Bd.

However, we need to assume that the demand for bonds is also related to income and the interest rate. So, let's use a similar equation for the demand for bonds:

Bd = $Y(a * i)

Here, 'a' is a constant that represents the relationship between the interest rate and the demand for bonds. It can have a positive value since demand for bonds typically increases as interest rates rise.

Now, without knowing the specific value of 'a' or having more information, it's difficult to provide an exact derivation. Financial experts would typically estimate the value of 'a' based on various factors like investor preferences, market conditions, and economic indicators.

So, unfortunately, we can't provide a definitive derivation without more information. But, hey, at least we had some fun trying to figure it out, right?

To derive the demand for bonds, you can use the equation:

Bd = $Y(ai)

In this equation:
- Bd represents the demand for bonds.
- $Y represents a person's wealth, which is $50,000 in this case.
- a represents a coefficient that determines the sensitivity of bond demand to changes in the interest rate.
- i represents the interest rate.

Since you are not given the specific value of the interest rate (i), you won't be able to calculate the precise demand for bonds. However, you can still analyze the relationship between bond demand and income (Y) by considering the equation.

By inputting the given income value of $60,000 into the equation and assuming a certain value for the coefficient a, you can analyze the demand for bonds at different interest rates. However, keep in mind that without the specific interest rate value, you won't be able to calculate the actual bond demand.

To derive the demand for bonds, you can start with the equation for the demand for money (Md). The demand for money equation you provided is Md = $Y(0.35 - i), where Y represents income and i represents the interest rate.

To relate the demand for money to the demand for bonds, you need to introduce a new variable, let's call it a, which represents the sensitivity of the demand for bonds to changes in the interest rate.

The equation for the demand for bonds (Bd) can then be written as Bd = $Y(a * i), where a > 0. This means that as the interest rate increases, the demand for bonds will also increase.

Now, if you want to determine the specific equations for the demand for bonds based on the given information, there is still some missing information. You mentioned that a person's wealth is $50,000 and their yearly income is $60,000. However, this information is not directly relevant to the demand for bonds equation itself.

It would be helpful if you have the value of the interest rate (i) provided in the question. With that information, you can substitute the values of Y, a, and i into the equation and calculate the demand for bonds.