Suppose the Bank Negara Malaysia change the quantity of money in the economy. Graphically illustrate how does this change affect the interest rate in the long run?
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Suppose the Bank Negara Malaysia change the quantity of money in the economy. Graphically illustrate how does this change affect the interest rate in the short run?
1. Labour Market. Draw a diagram of the labour market where there above the equilibrium level. Use I to denote the amount of labour to denote the amount of labour hired. bour market where the real wage is stuck note the amount of labour willing to work and L1 Now suppose there is an increase in technology that raises the demand the new demand curve and explain what happens to the and curve and explain what happens to the number...
Graphically illustrate how does this change affect the interest rate in the short run?
▪ Assume the economy has a natural rate of unemployment of 5%. Graphically illustrate when the actual inflation is 4% and expected inflation is 2%. What will happen to the economy when expected inflation adjust to the actual inflation in the long- run?
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2. Suppose the economy is in long-run equilibrium, with real GDP at $19 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases money supply by 6%. a) Illustrate the short-run effects of the monetary policy by using aggregate demand-aggregate supply model. Be sure to indicate the direction of change in real GDP, the price level and the unemployment rate. b) Illustrate the long-run effects of the monetary policy by using aggregate demand-aggregate supply model....
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Suppose that the money demand function takes the form If output grows at rate and the nominal interest rate is constant, at what rate will the demand for real balances grow? What is the velocity of money in this economy? If inflation and nominal interest rates are constant, at what rate, if any, will velocity grow? How will a permanent (once-and-for-all) increase in the level of interest rates affect the level of velocity? How will it affect the subsequent growth...
3. An economy fixes its exchange rate at 5 pesos per US dollar. It has a balance of payment surplus of US$ 100 million (15%). What would happen to the exchange rate if the central bank does not do anything? a. b. What action would the central bank take to keep the exchange rate fixed? c. How would the central bank's action affect high-powered money and the money supply? ' What are the impacts of the change in the money...