Based on the extension of the IS-LM model (to include the risk
premium), let x be the risk
premium. When the central bank increases the money supply,
| The LM curve shifts upward |
| The IS curve shifts to the left |
| The IS curve shifts to the right |
| The LM curve shifts downward |
|
The risk premium |
|
The risk premium |
Homework Answers
The LM curve shifts downward.
When Central Bank of the country increases money supply, it leads to rightwards shift of the money supply curve in the money market and thus rate of interest declines in the money market. Considering the IS-LM framework, when the central bank will increase money supply , the LM curve will shift rightwards and downwards and thus rate of interest in the economy will decline and national output will increase because investment level increases with the decline in the rate of interest.
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Based on the extension of the IS-LM model (to include the risk
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It is not necessary to write detail answer, some question is easy to find answer, you...
It is not necessary to write detail answer, some question is
easy to find answer, you dont need to explain in detail, thank you
:)
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Question 8 The theory of liquidity preference implies that an increase in the price level shifts the Not yet answered Marked out of 2.00 Flag question Select one: a money demand curve to the right, so the interest rate decreases. b. money demand curve to the left, so the interest rate decreases. 0 C. money demand curve to the right, so the interest rate increases. 0 d. money demand curve to the left, so the interest rate increases. Question 9...
It is not necessary to write detail answer, some question is
easy to find answer, you dont need to explain in detail, thank you
:)
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Please box answers! Thank
you.
11. Monetary policy and the LM curve Aa Aa The following graph shows the demand and supply of real money balances in a hypothetical economy. Use the black point (X point) to indicate the equilibrium in this market. Dashed drop lines will automatically extend to both axes. REAL INTEREST RATE [Percent) 10 Equilibrium Supply New Supply New Equilibrium Demand 3 0 10 20 30 40 50 60 70 80 90 100 REAL MONEY BALANCES Help...
need help on d-i
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