Homework Answers
Option A.
When the real GDP decreases, the interest rates in the economy falls which increases the incentive for people to hold more money in hand.
Similarly when the price level increases, the demand for money also increases.
Thus, changes in the real GDP and changes in the price will thus Increase the demand for money and hence shifts the money demand curve.
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Which of the following shifts the demand for money curve? i. change in the nominal interest...
When the money demand curve shifts right and the money supply is unchanged, the equilibrium price...
When the money demand curve shifts right and the money supply is unchanged, the equilibrium price level decreases and the equilibrium value of money increases. true false The money supply in Grayfield is $8 billion. Nominal GDP is $32 billion and real GDP is $24 billion. The central bank of Grayfield has instituted a policy of zero inflation. Assuming that velocity is stable, if real GDP grows by 2.5 percent this year then the central bank of Grayfield will increase...
50. Ceteris paribus, the total demand for money curve will increase (shift rightward): A. if interest...
50. Ceteris paribus, the total demand for money curve will increase (shift rightward): A. if interest rates increase. B. if nominal GDP decreases. C. if the price level decreases. D. if nominal GDP increases. 51. Ceteris paribus, the total demand for money curve will decrease (shift leftward): A. if interest rates increase. B. if nominal GDP decreases. C. if the price level increases. D. if nominal GDP increases. 52. Which of the following is correct? A. The asset (speculative) demand...
The two most important factors that cause the money demand curve to shift are A. the...
The two most important factors that cause the money demand curve to shift are A. the nominal interest rate and the money supply. B. real GDP and the price level. C. nominal GDP and the Fed. D. the price level and the nominal interest rate.
TANe 41. What can cause the asset demand for money curve to shift to the left?...
TANe 41. What can cause the asset demand for money curve to shift to the left? A). If the interest rate increases. C). If nominal GDP increases E). If the price level increases B). If the interest rate decresases. D). If nominal GDP decreases 42, Which of the following is true regarding the quantity of asset demand for money? A) It varies directly with the level of nominal GDP. B) It varies directly with the rate of interest C) It...
Hi I need help on parts E-G. Thank you very much Question 5. Money and Inflation....
Hi I need help on parts E-G. Thank you very much
Question 5. Money and Inflation. The demand for real money is
given by
Y L(Y, i) = Y / ?i
Here Y is real GDP and i is the nominal interest rate measured
in percentage points. The future
inflation ?e is expected to be zero.
(A) Derive an expression for the velocity of money. Comment on
the form of your answer: is velocity
a constant number? If not, why...
4. If nominal money demand doubles and the real money supply also does what happens to...
4. If nominal money demand doubles and the real money supply also does what happens to the price level ( ). The price level increases by a factor of four b. The price level doubles ). The price level is unchanged. d. The price level falls by one-half. IL Short-Answer O stiens (19 points) 5. (7 points) If the Federal Reserve sold government securities, then the money supply (increase decrease remain the same), the money he would _(increase decrease remain...
2. Shifts in aggregate demand Which of the following formulas best defines GDP using the expenditure...
2. Shifts in aggregate demand
Which of the following formulas best defines GDP using the
expenditure method?
a- AD=I+G+(X−M)
b- AD=C−I−G+(X−M)
c- AD=C+I+G+(X−M)A
d- AD=C+I+G+X
Adjust the following graph by shifting either the curve or the point on the curve to illustrate an increase in government spending. PRICE LEVEL REAL GDP
- Question 1 (5 marks) I. Suppose money demand (on the horizontal axis) is plotted against...
- Question 1 (5 marks) I. Suppose money demand (on the horizontal axis) is plotted against the nominal interest rate on the vertical axis). This money demand curve will shift to the right when which of the following occurs? a. an increase in income. b. a reduction in the interest rate. c. an increase in the money supply. d. a decrease in the money supply. II. At the current interest rate, suppose the supply of money is less than the...
If the price of a DVD falls, i. the demand curve for DVDs will shift rightward....
If the price of a DVD falls, i. the demand curve for DVDs will shift rightward. ii. the demand curve for DVDs will not shift. iii. there will be a movement along the demand curve for DVDs. Select one: A. i only d B. ii only C. iii only D. ii and i E. i and iii O Which of the following increases the supply of petrol? Select one: O A. A decrease in the price of a resource used...
BE QUESTION 32 Other things constant, when nominal wages fall, the change as a result of...
BE QUESTION 32 Other things constant, when nominal wages fall, the change as a result of the decrease in wages.) O Aggregate Demand curve shifts left: rises. Short Run Aggregate Supply curve shifts left rises. and the equilibrium price level me household w h oes NOT Short Run Aggregate Supply curve shirts rightfalls. Aggregate Demand curve shifts rightfalls. QUESTION 33 Price level Panel (b) LRAS Real GDP See All In the figure shown, the intersection of SRAS with AD indicates...
50. Ceteris paribus, the total demand for money curve will increase (shift rightward): A. if interest rates increase. B. if nominal GDP decreases. C. if the price level decreases. D. if nominal GDP increases. 51. Ceteris paribus, the total demand for money curve will decrease (shift leftward): A. if interest rates increase. B. if nominal GDP decreases. C. if the price level increases. D. if nominal GDP increases. 52. Which of the following is correct? A. The asset (speculative) demand...
TANe 41. What can cause the asset demand for money curve to shift to the left? A). If the interest rate increases. C). If nominal GDP increases E). If the price level increases B). If the interest rate decresases. D). If nominal GDP decreases 42, Which of the following is true regarding the quantity of asset demand for money? A) It varies directly with the level of nominal GDP. B) It varies directly with the rate of interest C) It...
Hi I need help on parts E-G. Thank you very much
Question 5. Money and Inflation. The demand for real money is
given by
Y L(Y, i) = Y / ?i
Here Y is real GDP and i is the nominal interest rate measured
in percentage points. The future
inflation ?e is expected to be zero.
(A) Derive an expression for the velocity of money. Comment on
the form of your answer: is velocity
a constant number? If not, why...
4. If nominal money demand doubles and the real money supply also does what happens to the price level ( ). The price level increases by a factor of four b. The price level doubles ). The price level is unchanged. d. The price level falls by one-half. IL Short-Answer O stiens (19 points) 5. (7 points) If the Federal Reserve sold government securities, then the money supply (increase decrease remain the same), the money he would _(increase decrease remain...
2. Shifts in aggregate demand
Which of the following formulas best defines GDP using the
expenditure method?
a- AD=I+G+(X−M)
b- AD=C−I−G+(X−M)
c- AD=C+I+G+(X−M)A
d- AD=C+I+G+X
Adjust the following graph by shifting either the curve or the point on the curve to illustrate an increase in government spending. PRICE LEVEL REAL GDP
- Question 1 (5 marks) I. Suppose money demand (on the horizontal axis) is plotted against the nominal interest rate on the vertical axis). This money demand curve will shift to the right when which of the following occurs? a. an increase in income. b. a reduction in the interest rate. c. an increase in the money supply. d. a decrease in the money supply. II. At the current interest rate, suppose the supply of money is less than the...
If the price of a DVD falls, i. the demand curve for DVDs will shift rightward. ii. the demand curve for DVDs will not shift. iii. there will be a movement along the demand curve for DVDs. Select one: A. i only d B. ii only C. iii only D. ii and i E. i and iii O Which of the following increases the supply of petrol? Select one: O A. A decrease in the price of a resource used...
BE QUESTION 32 Other things constant, when nominal wages fall, the change as a result of the decrease in wages.) O Aggregate Demand curve shifts left: rises. Short Run Aggregate Supply curve shifts left rises. and the equilibrium price level me household w h oes NOT Short Run Aggregate Supply curve shirts rightfalls. Aggregate Demand curve shifts rightfalls. QUESTION 33 Price level Panel (b) LRAS Real GDP See All In the figure shown, the intersection of SRAS with AD indicates...
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