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1) Use the intertemporal model to argue your answer. If the central bank conducts an open market sale then
it will trigger inflation and the output level will decrease ( this option is incorrect) 2) In the model we discussed in class where we use a cash in advance constraint to make money "valuable", the velocity of money
increases when the price level increases ( this option is incorrect) 3) An increase in the demand for money will
lead to inflation ( this option is incorrect) |
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1)
Use the intertemporal model to argue your answer.
If the central bank conducts an open...
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...
4. Suppose the central bank wants to keep the real interest rate constant at some level,...
4. Suppose the central bank wants to keep the real interest rate constant at some level, ř. Describe whether it needs to increase, decrease, or not change the money supply to do this in response to each of the following developments. Except in part (d), assume that P is permanently fixed at some exogenous level, P. a. The demand for money at a given P, i, and Y increases. b. There is an upward shift of the consumption function. c....
9) Which of the following imply a deflation? I. persistently increasing CPI III. positive CPI V....
9) Which of the following imply a deflation? I. persistently increasing CPI III. positive CPI V. persistently lower inflation rate IL. persistently decreasing CPI IV, negative CPI VI. negative inflation rate C) II, IV and VI 10) The quantity theory of money argues that, in the long run (when RGDP stays constant), the percentage change in money will create an equal percentage change in A) velocity B) real GDP C) inflation rate. D) the price level. 11) If velocity is...
Macroeconomic Multiple Choice Questions Answer All 10 Questions* 1) If the Central Bank of Kuwait puts...
Macroeconomic Multiple Choice Questions
Answer All 10 Questions*
1) If the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision is based on A) the fact that the economy is at full employment B) Expectation of excessive inflation in the future C) the fact that the economy is in an expansion D) Unemployment level is high 2) When the interest rate is set at a very low rate A) the opportunity cost of holding money is...
1. Is the Phillips curve a myth? Intertemporal tradeoff between inflation and unemployment After the World...
1. Is the Phillips curve a myth? Intertemporal tradeoff between inflation and unemployment After the World War II, empirical economists noticed that, in many advanced economies, as unemployment fell, inflation tended to rise, and vice versa. The inverse relationship between unemployment and Inflation, was depicted as the Phillips curve, after William Phillips of the London School of Economics. In the 1950s and 1960s, the Phillips curve convinced many policy makers that they could use the relationship to pick acceptable levels...
Q1, and 4. Please explain in detail about the answer, please use a graph, explain and...
Q1, and 4. Please explain in detail about the answer, please use
a graph, explain and interpret the graph if needed. Thank you
1. If the velocity of money were to increase but the money supply stayed the same, we definitely would see a. a decrease in nominal GDP. rightward shift in Aggregate Supply. b. a c. a decrease in real GDP d. a rightward shift in Aggregate Demand. e. deflation. 2. If a country increases its money supply by...
Multiple choice: 1.The long-run model determines ________ output and ________, while the short-run model determines ________...
Multiple choice: 1.The long-run model determines ________ output and ________, while the short-run model determines ________ and ________ inflation. a. potential; long-run inflation; current output; current b. potential; unemployment; current output; long-run c. current; long-run inflation; unemployment; current d. potential; unemployment; unemployment; current e. current; unemployment; potential output; current 2. The IS curve will shift ____ when government spending increases but will likely have an ambiguous effect if imports ______ at the same time. Moreover, consumption, as well as exports...
Advanced Macroeconoics II (41-434) Assignment 1 1. Consider the following IS/LM Model discussed in the class...
Advanced Macroeconoics II (41-434) Assignment 1 1. Consider the following IS/LM Model discussed in the class (IS) (LM) rn-p-y-Ai, λ > 0. where π' is a expected inflation, g is a government spending, and m is money supply, respec tively. It is assumed that price level is fixed as p-p A. Calculate the equilibriu interest rate and output level. B. Assume that g is constant. Calculate the effect of the change in the money supply on the equilibrium interest rate...
please answer Question 7: Inflation targeting and the Taylor rule in the IS-LM model Consider a...
please answer Question 7:
Inflation targeting and the Taylor rule in the IS-LM model Consider a closed economy in which the central bank follows an interest rate rule. The IS relation is given by Y C(Y- T) I(Y,r) G Where r is the real interest rate. The central bank sets the nominal interest rate according to the rule i = i* + a(n° =- T*) + b(Y- Y1) Where T is expected inflation, T* is the target rate of inflation,...
1. Jordan loaned Taylor $1,200 on March 15, 2009. Taylor returned $1,260 on March 14, 2010....
1. Jordan loaned Taylor $1,200 on March 15, 2009. Taylor returned $1,260 on March 14, 2010. Inflation was 2% over the 1-year period. What is the real interest rate that Taylor paid? 5% 2% 3% 7% 2. Which of the following is an example of money illusion assuming that inflation is 5%? You receive a 10% raise at your part-time job and start spending extra money on entertainment every weekend. You do not receive a raise at your part-time job...
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...
4. Suppose the central bank wants to keep the real interest rate constant at some level, ř. Describe whether it needs to increase, decrease, or not change the money supply to do this in response to each of the following developments. Except in part (d), assume that P is permanently fixed at some exogenous level, P. a. The demand for money at a given P, i, and Y increases. b. There is an upward shift of the consumption function. c....
9) Which of the following imply a deflation? I. persistently increasing CPI III. positive CPI V. persistently lower inflation rate IL. persistently decreasing CPI IV, negative CPI VI. negative inflation rate C) II, IV and VI 10) The quantity theory of money argues that, in the long run (when RGDP stays constant), the percentage change in money will create an equal percentage change in A) velocity B) real GDP C) inflation rate. D) the price level. 11) If velocity is...
Macroeconomic Multiple Choice Questions
Answer All 10 Questions*
1) If the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision is based on A) the fact that the economy is at full employment B) Expectation of excessive inflation in the future C) the fact that the economy is in an expansion D) Unemployment level is high 2) When the interest rate is set at a very low rate A) the opportunity cost of holding money is...
1. Is the Phillips curve a myth? Intertemporal tradeoff between inflation and unemployment After the World War II, empirical economists noticed that, in many advanced economies, as unemployment fell, inflation tended to rise, and vice versa. The inverse relationship between unemployment and Inflation, was depicted as the Phillips curve, after William Phillips of the London School of Economics. In the 1950s and 1960s, the Phillips curve convinced many policy makers that they could use the relationship to pick acceptable levels...
Q1, and 4. Please explain in detail about the answer, please use
a graph, explain and interpret the graph if needed. Thank you
1. If the velocity of money were to increase but the money supply stayed the same, we definitely would see a. a decrease in nominal GDP. rightward shift in Aggregate Supply. b. a c. a decrease in real GDP d. a rightward shift in Aggregate Demand. e. deflation. 2. If a country increases its money supply by...
Advanced Macroeconoics II (41-434) Assignment 1 1. Consider the following IS/LM Model discussed in the class (IS) (LM) rn-p-y-Ai, λ > 0. where π' is a expected inflation, g is a government spending, and m is money supply, respec tively. It is assumed that price level is fixed as p-p A. Calculate the equilibriu interest rate and output level. B. Assume that g is constant. Calculate the effect of the change in the money supply on the equilibrium interest rate...
please answer Question 7:
Inflation targeting and the Taylor rule in the IS-LM model Consider a closed economy in which the central bank follows an interest rate rule. The IS relation is given by Y C(Y- T) I(Y,r) G Where r is the real interest rate. The central bank sets the nominal interest rate according to the rule i = i* + a(n° =- T*) + b(Y- Y1) Where T is expected inflation, T* is the target rate of inflation,...
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