Consider a standard Keynesian economy. Which shock would cause the slope of the money demand curve...
Consider a standard Keynesian economy. Which shock would cause the slope of the money demand curve to become steeper?
A. Money demand becomes less sensitive to changes in the interest rate
B. Money demand becomes more sensitive to changes in the interest rate
C. Money demand becomes more sensitive to changes in the output
D. Money demand becomes less sensitive to changes in the output
Homework Answers
A steeper money demand curve means that the money demand will be less affected by the interest rate in the market. i.e. if the interest rate increase or decrease the money demand remains the same.
The answer is "A", Money demand becomes less sensitive to change in interest rate.
Add Answer to:
Consider a standard Keynesian economy. Which shock would cause
the slope of the money demand curve...
and if C Monetary policy will be more effective if the money demand curve is and...
and if C Monetary policy will be more effective if the money demand curve is and I are sensitive to changes in the interest rates O flatter; very Osteeper; very steeper; not flatter; not
Consider a standard Keynesian economy with partially sticky prices. Suppose the economy experiences an increase in...
Consider a standard Keynesian economy with partially sticky prices. Suppose the economy experiences an increase in the precautionary money demand. Using graphs and written discussion, examine the economy dynamics in the wake of the shock. For full credit, be sure to address: • Capture the timing in your written discussion • If a curve shifts, explain why/economic intuition • If a market is in disequilibrium, explain how it returns to equilibrium • Explain, if possible, the final outcome in terms...
5. (5 marks) In Figure A below one curve depicts the Keynesian view of money demand...
5. (5 marks) In Figure A below one curve depicts the Keynesian view of money demand and the other depicts the monetarist view. In Figure B, one curve depicts the Keynesian view of investment demand and the other depicts the monetarist view. Figure A N- 160 200 80 120 Quantity of money Figure B • 30 60 90 120 150 180 210 240 270 300 Investment spending a) Which of the two money demand curves in Figure A below depicts...
1) Which of the following can cause the 45 degree line to shift in the Keynesian...
1) Which of the following can cause the 45 degree line to shift in the Keynesian cross diagram? a. A change in planned expenditure b. A shock to AD c. Changes in G, I, or C d. Nothing can shift this line. 2) According to Keynes, the supply of real money and the demand for cash as opposed to other types of assets combine to find _____________ in equilibrium. a. the federal funds rate b. the real interest rate c....
Suppose there was a wave of business optimism in the economy. What would the impact be...
Suppose there was a wave of business optimism in the economy. What would the impact be on the dynamic aggregate demand curve? Awave of business optimism would investment and therefore increase aggregate expenditure at each real Interest rate. This would be reflected in a shift to the night of the dynamic aggregate demand curve. Economy A and Economy Bare similar in every way except that in Economy A, 80 percent of aggregate expenditure is sensitive to changes in the real...
TANe 41. What can cause the asset demand for money curve to shift to the left?...
TANe 41. What can cause the asset demand for money curve to shift to the left? A). If the interest rate increases. C). If nominal GDP increases E). If the price level increases B). If the interest rate decresases. D). If nominal GDP decreases 42, Which of the following is true regarding the quantity of asset demand for money? A) It varies directly with the level of nominal GDP. B) It varies directly with the rate of interest C) It...
B4. Closed economy Keynesian model: The aggregate demand-side of the economy Rigidia is well-described by a...
B4. Closed economy Keynesian model: The aggregate demand-side of the economy Rigidia is well-described by a standard IS-LM-FE framework while the short-run aggregate supply side is characterized by (SRAS) aggregate output/income, Y is the full employment output level, P is the Here Y is realized aggregate realized price level, Pe is the expected price level and b is a constant that depends on the slope of the labour demand curve. Explain the effects of each of the following on the...
1. If the money demand does not depend on the interest rate, then the LM curve...
1. If the money demand does not depend on the interest rate, then the LM curve ______. a. is horizontal b. is vertical c. shifts up to the right d. shifts down to the right 2. If money demand becomes more income elastic, the LM curve will __________. a. become flatter b. shift to the right c. become stepper d. shift to the left 3. The labour force is defined as _________. a. the total number of working age individuals...
10. In the 1970s "Great Inflation", inflation was increased because Policy makers thought potential output was...
10. In the 1970s "Great Inflation", inflation was increased because Policy makers thought potential output was higher than it actually turned out to be and policy shifted the AD curve to the left Policy makers thought potential output was lower than it actually turned out a. b. to be and policy shifted the AD curve to the left Policy makers thought potential output was lower than it actually turned out to be and policy shifted the AD curve to the...
5) What would best be considered the ultimate consequences of a liquidity trap as described in Keynesian theory? a)...
5) What would best be considered the ultimate consequences of a liquidity trap as described in Keynesian theory? a) Bonds would be hoarded instead of money leading to ever higher interest rates b) There would be a massive shortage of money and tremendous demand for bonds, regardless of how high interest rates are. o) There would be universal refusal of money leading to a reversion back to the barter system. d) Money would be hoarded instead of bonds regardless of...
and if C Monetary policy will be more effective if the money demand curve is and I are sensitive to changes in the interest rates O flatter; very Osteeper; very steeper; not flatter; not
5. (5 marks) In Figure A below one curve depicts the Keynesian view of money demand and the other depicts the monetarist view. In Figure B, one curve depicts the Keynesian view of investment demand and the other depicts the monetarist view. Figure A N- 160 200 80 120 Quantity of money Figure B • 30 60 90 120 150 180 210 240 270 300 Investment spending a) Which of the two money demand curves in Figure A below depicts...
Suppose there was a wave of business optimism in the economy. What would the impact be on the dynamic aggregate demand curve? Awave of business optimism would investment and therefore increase aggregate expenditure at each real Interest rate. This would be reflected in a shift to the night of the dynamic aggregate demand curve. Economy A and Economy Bare similar in every way except that in Economy A, 80 percent of aggregate expenditure is sensitive to changes in the real...
TANe 41. What can cause the asset demand for money curve to shift to the left? A). If the interest rate increases. C). If nominal GDP increases E). If the price level increases B). If the interest rate decresases. D). If nominal GDP decreases 42, Which of the following is true regarding the quantity of asset demand for money? A) It varies directly with the level of nominal GDP. B) It varies directly with the rate of interest C) It...
B4. Closed economy Keynesian model: The aggregate demand-side of the economy Rigidia is well-described by a standard IS-LM-FE framework while the short-run aggregate supply side is characterized by (SRAS) aggregate output/income, Y is the full employment output level, P is the Here Y is realized aggregate realized price level, Pe is the expected price level and b is a constant that depends on the slope of the labour demand curve. Explain the effects of each of the following on the...
10. In the 1970s "Great Inflation", inflation was increased because Policy makers thought potential output was higher than it actually turned out to be and policy shifted the AD curve to the left Policy makers thought potential output was lower than it actually turned out a. b. to be and policy shifted the AD curve to the left Policy makers thought potential output was lower than it actually turned out to be and policy shifted the AD curve to the...
5) What would best be considered the ultimate consequences of a liquidity trap as described in Keynesian theory? a) Bonds would be hoarded instead of money leading to ever higher interest rates b) There would be a massive shortage of money and tremendous demand for bonds, regardless of how high interest rates are. o) There would be universal refusal of money leading to a reversion back to the barter system. d) Money would be hoarded instead of bonds regardless of...
Most questions answered within 3 hours.
-
calculate the mass of forsterite (Mg2SiO4) that contains a
million (1.00•10^6) oxygen
asked 19 minutes ago -
A heat engine has an efficiency of 0.48. Initially,
the engine performs net work W per...
asked 9 minutes ago -
identify the effect on the financial statement on the
following senarios:
b) the clients business mainly...
asked 6 minutes ago -
Whenever two Apollo astronauts were on the surface of the Moon,
a third astronaut orbited the...
asked 16 minutes ago -
Suppose that Marriott’s production process is characterized by
constant returns to scale at all output levels....
asked 16 minutes ago -
If a customer places a buy order for one millisecond only on an
electronic limit order...
asked 24 minutes ago -
An aqueous solution of perchloric acid is
standardized by titration with a 0.101 M solution
of...
asked 33 minutes ago -
Huckster Corporation purchased land on January 1, 20X1, for
$24,000. On June 10, 20X4, it sold...
asked 30 minutes ago -
A 2400-kg airplane pulls two gliders, the first of mass 330 kg
and the second of...
asked 42 minutes ago -
When I have a regression equation such as Y = beta 0 + beta 1 X...
asked 46 minutes ago -
1) Describe how the firm, Google is organized. a. Note the
formal structure (Organizational Charts); also...
asked 52 minutes ago -
Q 1 Give a numerical example of non routine decision,
Determine the relevant costs for this...
asked 53 minutes ago