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Assume that the money demand function is (M / p)d = 2,200 – 200r, where r...
9. Assume that the money demand function is ( M P)d= 2,200 – 200r, where r...
9. Assume that the money demand function is ( M P)d= 2,200 – 200r, where r is the interest rate in percent. The money supply M is 2,000, and the price level P is 2. If the price level is fixed and the supply of money is raised to 2,800, then the equilibrium interest rate will: A) drop by 4 percent. B) drop by 2 percent. C) drop by 1 percent. D) remain unchanged. 10. The reason that the income...
Hi the answer to 53 is D and the answer to 54 is B. I am unsure how to get these answers. 53. Assume that the money demand (function), L(r, Y)Y-100r, where r is the interest rate in percent. The mone...
Hi the answer to 53 is D and the answer to 54 is B. I am unsure
how to get these answers.
53. Assume that the money demand (function), L(r, Y)Y-100r, where r is the interest rate in percent. The money supply Mis 2,000, Y-2,000 and the price level Pis 2. With the above, at Y 2,000, the (equilibrium) interest rate for the money market equilibrium equation is_ A) 2percent B) 4 C) 6 D) none of the above 54....
Suppose that the money demand function is (M/P)d = 800 - 50r, where r is interest...
Suppose that the money demand function is (M/P)d = 800 - 50r, where r is interest rate in percent. The money supply M is 2,000 and the price level P is fixed at 5. a. Graph the supply and demand for real money balances. b. What is equilibrium interest rate? c. What happens to the equilibrium interest rate if the supply of money is reduced from 2000 to 15000? d. If the central bank wants the interest rate to be...
Suppose that the money demand function is (M/ P)^d = 1000-100r where r is the interest...
Suppose that the money demand function is (M/ P)^d = 1000-100r where r is the interest rate in percent. The money supply M is 1000 and the price level P is 2.(a) Graph the supply and demand for real money balances.(b) What is the equilibrium interest rate?(c) Assume the price level is xed. What happens to the equilibrium interest rate if the supply of money is raised from 1000 to 1200?(d) If the Fed wishes to raise the interest rate...
Aggregate Demand I — Work It Out: Question 2 Suppose that the money demand function is...
Aggregate Demand I — Work It Out: Question 2 Suppose that the money demand function is c. What happens to the equilibrium interest rate, r, if the supply of money is raised from $1200 to $1350? M" = 600 – 757 % where r is the interest rate in percent. The money supply M is $1200, and the price level P is fixed at 4. Round answers to one place after the decimal when necessary. d. If the central bank...
Suppose that the money demand function is M tin Credit = 600 - 75 D wherer...
Suppose that the money demand function is M tin Credit = 600 - 75 D wherer is the interest rate in percent. The money supply M is $1200, and the price level Pjs fixed at 4. Round answers to one place after the decimal when necessary. sation Credit c. What happens to the equilibrium interest rate. r. if the supply of money is raised from $1200 to $9759 d. If the central bank wants the interest rate to be 7.0...
Aggregate Demand I - Work It Out: Question 2 Suppose that the money demand function is...
Aggregate Demand I - Work It Out: Question 2 Suppose that the money demand function is + = 600 – 757 where r is the interest rate in percent. The money supply M is $1500, and the price level P is fixed at 5. Round answers to one place after the decimal when necessary. c. What happens to the equilibrium interest rate, r, if the supply of money is raised from $1500 to $1350? % d. If the central bank...
A. Assume that the demand for real money balance (M/P)d is M/P = 0.4Y – 10i....
A. Assume that the demand for real money balance (M/P)d is M/P = 0.4Y – 10i. National income is 30,000 and the price level is 100 and the growth rate of nominal money is 2 percent. The real interest rate r is fixed at 3 percent. Also assume that the expected inflation rate equals the rate of nominal money growth. B. What is the quantity of money in the economy?
2. Chapter 11, The Keynesian Cross (5 points): • In the Keynesian cross, assume that the...
2. Chapter 11, The Keynesian Cross (5 points): • In the Keynesian cross, assume that the consumption function is given by: C = 200 +0.75(Y - T) Planned investment is 100, government purchases and taxes are both 100. (a) Graph planned expenditure as a function of income. (b) What is the equilibrium level of income? (c) If government purchases increase to 125, what is the new equilibrium income? (d) What level of government purchases is needed to achieve an income...
3. An economy has the following money demand function: (M/P 2Y a. Derive an expression for...
3. An economy has the following money demand function: (M/P 2Y a. Derive an expression for the velocity of money. What does velocity depend on? Explain why this dependency may occur. b. Calculate velocity if the nominal interest rate i is 4 e. If output Y is 1,000 units and the money supply M d. Suppose the announcement of a new head of the percent. is $1,200, what is the price level P? central bank, with a reputation of being...
9. Assume that the money demand function is ( M P)d= 2,200 – 200r, where r is the interest rate in percent. The money supply M is 2,000, and the price level P is 2. If the price level is fixed and the supply of money is raised to 2,800, then the equilibrium interest rate will: A) drop by 4 percent. B) drop by 2 percent. C) drop by 1 percent. D) remain unchanged. 10. The reason that the income...
Hi the answer to 53 is D and the answer to 54 is B. I am unsure
how to get these answers.
53. Assume that the money demand (function), L(r, Y)Y-100r, where r is the interest rate in percent. The money supply Mis 2,000, Y-2,000 and the price level Pis 2. With the above, at Y 2,000, the (equilibrium) interest rate for the money market equilibrium equation is_ A) 2percent B) 4 C) 6 D) none of the above 54....
Aggregate Demand I — Work It Out: Question 2 Suppose that the money demand function is c. What happens to the equilibrium interest rate, r, if the supply of money is raised from $1200 to $1350? M" = 600 – 757 % where r is the interest rate in percent. The money supply M is $1200, and the price level P is fixed at 4. Round answers to one place after the decimal when necessary. d. If the central bank...
Suppose that the money demand function is M tin Credit = 600 - 75 D wherer is the interest rate in percent. The money supply M is $1200, and the price level Pjs fixed at 4. Round answers to one place after the decimal when necessary. sation Credit c. What happens to the equilibrium interest rate. r. if the supply of money is raised from $1200 to $9759 d. If the central bank wants the interest rate to be 7.0...
Aggregate Demand I - Work It Out: Question 2 Suppose that the money demand function is + = 600 – 757 where r is the interest rate in percent. The money supply M is $1500, and the price level P is fixed at 5. Round answers to one place after the decimal when necessary. c. What happens to the equilibrium interest rate, r, if the supply of money is raised from $1500 to $1350? % d. If the central bank...
2. Chapter 11, The Keynesian Cross (5 points): • In the Keynesian cross, assume that the consumption function is given by: C = 200 +0.75(Y - T) Planned investment is 100, government purchases and taxes are both 100. (a) Graph planned expenditure as a function of income. (b) What is the equilibrium level of income? (c) If government purchases increase to 125, what is the new equilibrium income? (d) What level of government purchases is needed to achieve an income...
3. An economy has the following money demand function: (M/P 2Y a. Derive an expression for the velocity of money. What does velocity depend on? Explain why this dependency may occur. b. Calculate velocity if the nominal interest rate i is 4 e. If output Y is 1,000 units and the money supply M d. Suppose the announcement of a new head of the percent. is $1,200, what is the price level P? central bank, with a reputation of being...
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