Homework Answers
1. Planned investment will decrease.
Due to rise in interest rates profits are lowered and hence investments (planned) decreases and vice versa. Planned investment spending is a negative function of the interest rate.
2. Industries selling durable goods.
Consumers have little confidence in the economy during recession posing a higher risk to the demand for durable goods, consequently their demand decreases.
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Question 1 (1 point) If interest rates increase, how wil his affet planned investment? Planned investment...
Question 14 (1 point) Question 12 (1 point) Consider the following simplified balance sheet for a...
Question 14 (1 point) Question 12 (1 point) Consider the following simplified balance sheet for a bank. Suppose the required reserve ratio decreases from 10 percent to 5 percent. By how much can the bank increase its loans? Provide your answer in dollars measured in thousands rounded to two decimal places. Do not include any symbols, such as "$", "%," or ","in your answer. Suppose the supply of money, measured by M1, is $3.0 trillion, output, measured by real GDP,...
14/1meinti Question 12 (1 point) Suppose the supply of money, measured by M1, is $3.0 trillion,...
14/1meinti Question 12 (1 point) Suppose the supply of money, measured by M1, is $3.0 trillion, output, measured by real GDP, is $16.6 trillion, and the velocity of money is 6.5. Suppose the supply of money increases to $3.5 trillion but GDP and the velocity of money do not change. What is the percent by which prices change? Provide your answer as a percentage rounded to two decimal places. Do not include any symbols, such as "S, "," "% ,"...
7) Given the relationship between interest rates and planned investment planned investment A) increases if the inte...
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Question 2 (1 point) In an open economy suppose that GDP is $12 trillion. Consumption is...
Question 2 (1 point) In an open economy suppose that GDP is $12 trillion. Consumption is $8 trillion and government spending is $2 trillion, Taxes are $0.5 trillion. Exports are $1 trillion and imports are $3 trillion. What is private saving? $4 trillion $3.5 trillion $2.5 trillion $1.5 trillion Question 1 (1 point) Interest rate (%) Supply of loanable funds Demand for loanable funds 0 10 20 30 40 50 60 70 80 90 100 Quantity of loanable funds (billions...
question 15 QUESTION 15 Interest MS Rate MS, Interest Rate Iz Planned Investment Quantity of Money...
question 15
QUESTION 15 Interest MS Rate MS, Interest Rate Iz Planned Investment Quantity of Money Price Level LRAS SRAS, SRAS AD AD Real GDP in Trillions per Year In the above figure, suppose the economy is at a short-run equilibrium at point and the interest rate is r 2. Which of the following policy options for the Fed will help solve the short-run situation? open market sale of government securities lowering the differential between the discount rate and the...
In February 2014, South Africa had an inflation interest rates in January and is expected to increase or maintain the interest rates through 2014
QUESTION 4 In February 2014, South Africa had an inflation interest rates in January and is expected to increase or maintain the interest rates through 2014. The South African central bank is pursuing rate of 5.9 % and an unemployment rate of 24.1%. The South African central bank raised a(n): contractionary monetary policy to contain inflation. expansionary monetary policy to contain inflation. expansionary monetary policy to fight unemployment. contractionary monetary policy to fight unemployment QUESTION 5 When the economy is sluggish, the Fed will: raise interest rates, which...
[Related to the Solved Problem in this section] Consider the following information on an economy (all...
[Related to the Solved Problem in this section] Consider the following information on an economy (all values are in trillions of 2005 dollars): Consumption: Investment Government purchases: Net exports Taxes: Government transfer payments: C = $1.2 + 0.67 1 = $2 G = $2.1 NX = - $0.5 T = 0 TR = 0 a. This economy's equilibrium real GDP is $ 12 trillion. (Enter your response as an integer.) b. Now suppose that all the information given in part...
The graph depicts a dynamic aggregate demand (AD) and aggregate supply (AS) model of the economy....
The graph depicts a dynamic aggregate demand (AD) and aggregate supply (AS) model of the economy. Suppose that in 2003, the economy is in macroeconomic equilibrium, with GDP at GDP (year 1). The Fed projects that in 2004, the aggregate demand curve will be AD (year 2), that potential real GDP will be $12.45 trillion (GDP (year 2), and that actual real GDP will be $12.39 trillion LRAS (year 1) LRAS (year 2) SRAS (ycar1) SRAS (year 2 ear Year...
3,4,5 please! QUESTION 3 An increase in planned real investment spending causes O a shift of...
3,4,5 please!
QUESTION 3 An increase in planned real investment spending causes O a shift of the C+I+ G+X curve and a movement along the aggregate demand curve. O a shift of the C + I+ G +X curve that causes the aggregate demand curve to shift. O a shift of the C+1+ G+X curve but has no effect on the aggregate demand curve. a movement along the C + I+ G+X curve and a shift of the aggregate demand...
ce Level Long Run Aegregate Supply 110 LRAS 1 105 100 95 13 5 14.5 15.5...
ce Level Long Run Aegregate Supply 110 LRAS 1 105 100 95 13 5 14.5 15.5 165 Real GDP or Output amlbon of 2009 dollars Refer to the economic model pictured above: Decrease in price levels from 105 to 100 will cause Real GDP to O remain constant in the long run increase to 16.5 trillion in the long run O decrease to 13.5 trillion in the long run O increase to 15.5 trillion in the long run Price Level...
Question 14 (1 point) Question 12 (1 point) Consider the following simplified balance sheet for a bank. Suppose the required reserve ratio decreases from 10 percent to 5 percent. By how much can the bank increase its loans? Provide your answer in dollars measured in thousands rounded to two decimal places. Do not include any symbols, such as "$", "%," or ","in your answer. Suppose the supply of money, measured by M1, is $3.0 trillion, output, measured by real GDP,...
14/1meinti Question 12 (1 point) Suppose the supply of money, measured by M1, is $3.0 trillion, output, measured by real GDP, is $16.6 trillion, and the velocity of money is 6.5. Suppose the supply of money increases to $3.5 trillion but GDP and the velocity of money do not change. What is the percent by which prices change? Provide your answer as a percentage rounded to two decimal places. Do not include any symbols, such as "S, "," "% ,"...
7) Given the relationship between interest rates and planned investment planned investment A) increases if the interest rate drops from 6% to 4%. B) increases if the interest rate rises from 6% to 8%. C) is unaffected by any changes in interest rates. D) both A) and B) are correct. 8) To combat a recession with fiscal policy, the government should A) reduce government spending. B) reduce taxes on consumers to increase consumer disposable income. C) lower interest rates and...
Question 2 (1 point) In an open economy suppose that GDP is $12 trillion. Consumption is $8 trillion and government spending is $2 trillion, Taxes are $0.5 trillion. Exports are $1 trillion and imports are $3 trillion. What is private saving? $4 trillion $3.5 trillion $2.5 trillion $1.5 trillion Question 1 (1 point) Interest rate (%) Supply of loanable funds Demand for loanable funds 0 10 20 30 40 50 60 70 80 90 100 Quantity of loanable funds (billions...
question 15
QUESTION 15 Interest MS Rate MS, Interest Rate Iz Planned Investment Quantity of Money Price Level LRAS SRAS, SRAS AD AD Real GDP in Trillions per Year In the above figure, suppose the economy is at a short-run equilibrium at point and the interest rate is r 2. Which of the following policy options for the Fed will help solve the short-run situation? open market sale of government securities lowering the differential between the discount rate and the...
[Related to the Solved Problem in this section] Consider the following information on an economy (all values are in trillions of 2005 dollars): Consumption: Investment Government purchases: Net exports Taxes: Government transfer payments: C = $1.2 + 0.67 1 = $2 G = $2.1 NX = - $0.5 T = 0 TR = 0 a. This economy's equilibrium real GDP is $ 12 trillion. (Enter your response as an integer.) b. Now suppose that all the information given in part...
The graph depicts a dynamic aggregate demand (AD) and aggregate supply (AS) model of the economy. Suppose that in 2003, the economy is in macroeconomic equilibrium, with GDP at GDP (year 1). The Fed projects that in 2004, the aggregate demand curve will be AD (year 2), that potential real GDP will be $12.45 trillion (GDP (year 2), and that actual real GDP will be $12.39 trillion LRAS (year 1) LRAS (year 2) SRAS (ycar1) SRAS (year 2 ear Year...
3,4,5 please!
QUESTION 3 An increase in planned real investment spending causes O a shift of the C+I+ G+X curve and a movement along the aggregate demand curve. O a shift of the C + I+ G +X curve that causes the aggregate demand curve to shift. O a shift of the C+1+ G+X curve but has no effect on the aggregate demand curve. a movement along the C + I+ G+X curve and a shift of the aggregate demand...
ce Level Long Run Aegregate Supply 110 LRAS 1 105 100 95 13 5 14.5 15.5 165 Real GDP or Output amlbon of 2009 dollars Refer to the economic model pictured above: Decrease in price levels from 105 to 100 will cause Real GDP to O remain constant in the long run increase to 16.5 trillion in the long run O decrease to 13.5 trillion in the long run O increase to 15.5 trillion in the long run Price Level...
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