If the price level in the USA increases, then which of the following will happen? a....
If the price level in the USA increases, then which of the following will happen?
a. US exports to other countries will increase.
b. the US interest rate will increase
c. the US net export will increase
d. All of the above
Consider the following Quantity Equation of Money: MV=PY where V roughly constant and the growth rate of Y is generally positive. Then which of the following must be true?
a. The inflation rate is lower than the growth rate of money supply.
b. The money supply growth rate is less than the increase in the price level
c. The growth rate in the price level is the same as the growth rate in money supply
d. Both the growth rates in the price level and the money supply are constant
Homework Answers
a) "B"
At a higher price level the exports will decrease and imports will increase thereby decreasing the net exports and causing the flight of the capital that will lead to a higher interest rate. The answer is "B".
b) As the Y is also increasing the inflation rate is lower than the growth rate of money supply in the economy. the answer is "A".
Add Answer to:
If the price level in the USA increases, then which of the
following will happen?
a....
If the price level increases, then which of the following will happen? a. Interest rates will...
If the price level increases, then which of the following will happen? a. Interest rates will increase and hence investment will decrease b. Interest rate will decreases and investment will increase c. Both Interest rate and consumption will increase d. Both Interest rate and investment will decrease
The exchange rate effect of a price increase is: if the US price level increases, then the Fed increases interest rate i...
The exchange rate effect of a price increase is: if the US price level increases, then the Fed increases interest rate in order to stabilize the price level. As a result US dollar appreciates causing US exports to decreases. a. False b. True If the Fed increases money supply, then: a. the value of money decreases. b. the price level increases. c. Both of the above d. none of the above Which of the following will the Aggregate Demand curve...
The accompanying graph shows the relationship between the average annual increase in the price level and...
The accompanying graph shows the relationship between the average annual increase in the price level and the average annual increase in money supply across eight countries. 45-degree I Harpoglia a. What concept, related to monetary policy, does this graph help demonstrate? Valko Cherbani O Ragnar Nurkse's balanced growth theory O the liquidity preference model O buffer theory O convergence hypothesis Caz Resa Tyndaria Harnnastas Veckram eGonmorl'n monetary neutrality Increase in money supply (%) Use the concept or model identified in...
12. When the Federal Reserve increases the money supply, at a given price level the amount...
12. When the Federal Reserve increases the money supply, at a given price level the amount of output demanded is and the aggregate demand curve shifts a. greater, inward b. greater, outward c. lower, inward d. lower, outward 13. Aggregate supply is the relationship between the quantity of goods and services supplied and the a. Money supply b. Unemployment rate c. Interest rate d. Price level If a short-run equilibrium occurs at a level of output above the natural level,...
answer these 4 . will rate after Which of the following increases the price of the...
answer these 4 . will rate after
Which of the following increases the price of the dollar relative to the Mexican peso? o an increase in the demand for dollars an increase in the supply of dollars O an increase in the demand for pesos an increase in the supply of pesos If a Germany company must purchase products from a U.S. firm, it must first O convert its euros into US dollars in the foreign exchange market. O convert...
It would be greatly appreciated if you can help to do the followings. Thanks! 1. 2....
It would be greatly appreciated if you can help to do the
followings. Thanks!
1.
2.
3.
4.
5.
Suppose that the liquidity effect is immediate and smaller than the other effects, and our expectations of inflation adjust quickly. Referring to the graphs on the right, choose the time path of interest rates from an increase in the growth rate of the money supply that occurs at time T." O A. GraphB O B. Graph A Interest Rate When the...
Suppose that the Fed increases the growth rate of the money supply causing an increase in...
Suppose that the Fed increases the growth rate of the money supply causing an increase in the long-run expected rate of inflation. In the context of the Friedman effect combined with the expectation’s theory of the term structure: A. both short-term and long-term interests rates should decrease roughly by equal amounts in the short-run. B. short-term rates should decrease more than long-term rates in the short-run C. both short-term and long-term interests rates should increase roughly by equal amounts in...
1. Explain what will happen to the price level real GDP and the unemployment rate in...
1. Explain what will happen to the price level real GDP and the unemployment rate in the following cases: a. AD falls by the same amount that SRAS rises b. AD falls by less than SRAS rises c. AD falls by more than SRAS falls d. AD falls by the same amount that SRAS falls e. AD falls by less than SRAS falls 2. Explain how expectations about future sales will affect investment. 3. How will a change in the...
22) Which of the following would not increase the supply curve of loanable funds? A) A...
22) Which of the following would not increase the supply curve of loanable funds? A) A Federal Reserve purchase does of U.S. Government securities from commercial banks. B) A higher interest rate. C) An increase in the nation's real income D) All of the above shift the supply. 23) In Keynes's liquidity preference framework, A) the demand for bonds must equal the supply of money B) the demand for money must equal the supply of bonds. C) an excess demand...
26. If the US real exchange rate appreciates against major countries, then which of the following...
26. If the US real exchange rate appreciates against major countries, then which of the following is true about US exports and imports? a. The US export increases and import decreases b. The US export decreases and import increases c. Both export and import increases d. Net export remain unchanged 27. Which of the following statement is true? a. If national saving is greater than national investment, then net export is positive. b. If national saving is less than national...
The accompanying graph shows the relationship between the average annual increase in the price level and the average annual increase in money supply across eight countries. 45-degree I Harpoglia a. What concept, related to monetary policy, does this graph help demonstrate? Valko Cherbani O Ragnar Nurkse's balanced growth theory O the liquidity preference model O buffer theory O convergence hypothesis Caz Resa Tyndaria Harnnastas Veckram eGonmorl'n monetary neutrality Increase in money supply (%) Use the concept or model identified in...
12. When the Federal Reserve increases the money supply, at a given price level the amount of output demanded is and the aggregate demand curve shifts a. greater, inward b. greater, outward c. lower, inward d. lower, outward 13. Aggregate supply is the relationship between the quantity of goods and services supplied and the a. Money supply b. Unemployment rate c. Interest rate d. Price level If a short-run equilibrium occurs at a level of output above the natural level,...
answer these 4 . will rate after
Which of the following increases the price of the dollar relative to the Mexican peso? o an increase in the demand for dollars an increase in the supply of dollars O an increase in the demand for pesos an increase in the supply of pesos If a Germany company must purchase products from a U.S. firm, it must first O convert its euros into US dollars in the foreign exchange market. O convert...
It would be greatly appreciated if you can help to do the
followings. Thanks!
1.
2.
3.
4.
5.
Suppose that the liquidity effect is immediate and smaller than the other effects, and our expectations of inflation adjust quickly. Referring to the graphs on the right, choose the time path of interest rates from an increase in the growth rate of the money supply that occurs at time T." O A. GraphB O B. Graph A Interest Rate When the...
22) Which of the following would not increase the supply curve of loanable funds? A) A Federal Reserve purchase does of U.S. Government securities from commercial banks. B) A higher interest rate. C) An increase in the nation's real income D) All of the above shift the supply. 23) In Keynes's liquidity preference framework, A) the demand for bonds must equal the supply of money B) the demand for money must equal the supply of bonds. C) an excess demand...
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