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 to 7 percent, what money supply should it set?
Homework Answers
Add Answer to:
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 = 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...
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....
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...
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...
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 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...
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 $1200, and the price level P is fixed at 4. Round answers to one place after the decimal when necessary. a. Graph the supply and demand of real money balances by moving points A and B to graph the demand for money (y' and moving points...
Assume that the money demand function is (M / p)d = 2,200 – 200r, where r...
Assume that the money demand function is (M / p)d = 2,200 – 200r, where r is the interest rate in percent. If the price level is fixed at P=2, and the Fed wants to fix the interest rate at 7 percent, it should set the money supply at: a. 2,000 b. 1,800 C. 1,600 O d. 1,400
Question 2: Money market Suppose that the money demand function is (M/P) = 0.75 Y -...
Question 2: Money market Suppose that the money demand function is (M/P) = 0.75 Y - 200r The money supply M is 6000 and the price level is 2. a. Graph the supply for real money balances on a new graph (label it "figure 3"), and label the supply of real money balances (M/P). g. Suppose that the income is 6000. Complete Table 1 and draw the demand for real money balances curve ((M/P'] in figure 3. Find the value...
2. The demand for money is: Mº = PYL (1), where P is the price level,...
2. The demand for money is: Mº = PYL (1), where P is the price level, Y is the real GDP and L () is an inverse function of the rate of interest (i.e. when i increases, L (1) decreases, and vice versa). Money supply is: M$ = mH, where H is the high-powered money issued by the central bank and m is the money multiplier. (a) Draw the money demand and supply curves on a graph with money demand...
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 + = 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...
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 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...
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 $1200, and the price level P is fixed at 4. Round answers to one place after the decimal when necessary. a. Graph the supply and demand of real money balances by moving points A and B to graph the demand for money (y' and moving points...
Assume that the money demand function is (M / p)d = 2,200 – 200r, where r is the interest rate in percent. If the price level is fixed at P=2, and the Fed wants to fix the interest rate at 7 percent, it should set the money supply at: a. 2,000 b. 1,800 C. 1,600 O d. 1,400
Question 2: Money market Suppose that the money demand function is (M/P) = 0.75 Y - 200r The money supply M is 6000 and the price level is 2. a. Graph the supply for real money balances on a new graph (label it "figure 3"), and label the supply of real money balances (M/P). g. Suppose that the income is 6000. Complete Table 1 and draw the demand for real money balances curve ((M/P'] in figure 3. Find the value...
2. The demand for money is: Mº = PYL (1), where P is the price level, Y is the real GDP and L () is an inverse function of the rate of interest (i.e. when i increases, L (1) decreases, and vice versa). Money supply is: M$ = mH, where H is the high-powered money issued by the central bank and m is the money multiplier. (a) Draw the money demand and supply curves on a graph with money demand...
Most questions answered within 3 hours.
-
A telephone survey uses a random digit dialing machine to call
subjects. The random digit dialing...
asked 8 minutes ago -
How can having too little or too much of a certain
protein cause problems for an...
asked 1 hour ago -
Assume a muscle has a PCSA = 20 cm2 and Lo = 12 cm. Assume it...
asked 3 hours ago -
What is the yield to maturity of a ten-year, $1,000 bond with a
5.2% coupon rate...
asked 3 hours ago -
A mass m = 5 kg is tied on one end of a rope and is...
asked 3 hours ago -
The Average sales price of single-family houses in Charlotte is
$210,000 with a standard deviation of...
asked 4 hours ago -
Target Costing
Laser Impressions, Inc., manufactures color laser printers.
Model J20 presently sells for $225 and...
asked 4 hours ago -
a bottle cap manufacturer with four machines and six operators
wants to see if variation in...
asked 4 hours ago -
State Farm Insurance studies show that in Colorado, 55% of the
auto insurance claims submitted for...
asked 5 hours ago -
Complete the following reactions which form ethers (A
and B) and cyclic ethers (C-E) as major...
asked 5 hours ago -
in a perfectly elastic collision what is the velocity of ball A
if the original direction...
asked 6 hours ago -
PLEASE ANSWER ALL
1) The pressure of the atmosphere decreases with increasing
altitude in the
Choose...
asked 6 hours ago