T/F If the governement of Sri Lanka is to transfer money to its citizens, the Ms...
Homework Answers
False, since the interest rate will not stay the same.
If the government of Sri Lanka transfers money to its citizens, then the consumption (C) levels in the economy will increase and thus aggregate output (Y) will also increase. (Since Y= C+I+G ).Thus the increase in Y is due to increase in C and not in G as stated in the statement.
Also due to this transfer of money to its citizens, Money supply will increase and this will lead to a disequilibrium in the money market. The interest rate drops to restore equilibrium in the money market.
Add Answer to:
T/F
If the governement of Sri Lanka is to transfer money to its
citizens, the Ms...
3. Why Doesn't Capital Flow to Developing Countries? The Canadian Econ- omy is described by the...
3. Why Doesn't Capital Flow to Developing Countries? The Canadian Econ- omy is described by the following information on output, consumption, fiscal policy and investment: Y = 5,000 C = 250 +0.75(Y – T) T = 1,000 G = 2,000 I(r) = 1,000 – 50r Canada is a small open economy. a) If the world interest rate is equal to 5, what are net exports? Is Canada lending or borrowing from the rest of the world? b) The country of...
(22) In the short run, contractionary monetary policy causes output to _______________ and prices to _______________....
(22)
In the short run, contractionary monetary policy causes output
to _______________ and prices to _______________.
rise; rise
rise; fall
fall; rise
fall; fall
(23)
As the graph illustrates, consumers are worried about the
future and have begun saving more money. If the Fed does
not intervene in this situation, what will happen
to the price level in the long run?
Prices will increase.
Prices will stay the
same.
Prices will decrease.
There is insufficient
information to...
t t Question 1 (5 marks) I. Suppose money demand (on the horizontal axis) is plotted...
t t Question 1 (5 marks) I. Suppose money demand (on the horizontal axis) is plotted against the nominal interest rate on the vertical axis). This money demand curve will shift to the right when which of the following occurs? a. an increase in income. b. a reduction in the interest rate. c. an increase in the money supply. d. a decrease in the money supply. II. At the current interest rate, suppose the supply of money is less than...
4. If nominal money demand doubles and the real money supply also does what happens to...
4. If nominal money demand doubles and the real money supply also does what happens to the price level ( ). The price level increases by a factor of four b. The price level doubles ). The price level is unchanged. d. The price level falls by one-half. IL Short-Answer O stiens (19 points) 5. (7 points) If the Federal Reserve sold government securities, then the money supply (increase decrease remain the same), the money he would _(increase decrease remain...
Consider the economy of Wiknam. The consumption function is given by C = 250+ 0.6(Y-T). a....
Consider the economy of Wiknam. The consumption function is given by C = 250+ 0.6(Y-T). a. Government purchases and taxes are both 100. In the accompanying diagram, graph the IS curve for r ranging from 0 to 8 by dragging and dropping the end points to the correct locations b. The money supply M is 2,875 and the price level Pis 5. In the accompanying diagram, graph the LM curve for r ranging from 0 to 8 by dragging and...
The following graph shows the money market in a hypothetical economy. The central bank in this...
The following graph shows the money market in a hypothetical economy. The central bank in this economy is called the Fed. ASsume that the Fed fixes the quantity of money supplied. Suppose the price level increases from 90 to 105. Shift the appropriate curve on the graph to show the impact of an increase in the overall price level on the market for money. After the increase in the price level, the quantity of money demanded at the initial interest rate of 9%...
Consider the economy of Wiknam. The consumption function is given by f. With the initial values...
Consider the economy of Wiknam. The consumption function is given by f. With the initial values for monetary and fiscal policy, suppose that the price level falls from 5 to 3. What happens ? What are the new equilibrium interest rate and level of income? C = 250+ 0.6(Y-T). The investment function is The LM curve shifts to the by about 383.33. I = 100-20r. What are the new equilibrium interest rate and level of income? The money demand function...
Derivation of the Aggregate Demand Curve Suppose the economy of Y is described by the following...
Derivation of the Aggregate Demand Curve Suppose the economy of Y is described by the following equations: Consumption: C = 750 + 0.60 Yd where Ydrefers to disposable (post-tax) income. Taxes: T = 300 Government Expenditure: G = 30+0.2Y Investment: I = 400 -2000r Money Demand: L(r,Y) = Y – 10,000r Nominal Money Supply :Ms=$12000 Price Level P1=$3 Calculate the tax multiplier in Y Derive(sketch) the IS curve for Y. Derive(sketch) the LM curve for Y Solve for the equilibrium...
Money Demand According to Liquidity Preference Theery, why is the Money Demand curve downwaed sloping? a...
Money Demand According to Liquidity Preference Theery, why is the Money Demand curve downwaed sloping? a because interest rates rise as the Bank of Canada reduces the quantity of money demanded b. because interest rates fall as the Bank of Canada reduces the Money Supply c because people will want to hold less money as the cost of doing so fals d. because people will want to hold more money as the cost of doing so falls Money Demand and...
2. Changes in the money supply The following graph represents the money market in a hypothetical...
2. Changes in the money supply The following graph represents the money market in a hypothetical economy. As in the United States, this economy has a central bank called the Fed, but unlike in the United States, the economy is closed (that is, the economy does not interact with other economies in the world). The money market is currently in equilibrium at an interest rate of 6% and a quantity of money equal to $0.4 trillion, as indicated by the grey...
3. Why Doesn't Capital Flow to Developing Countries? The Canadian Econ- omy is described by the following information on output, consumption, fiscal policy and investment: Y = 5,000 C = 250 +0.75(Y – T) T = 1,000 G = 2,000 I(r) = 1,000 – 50r Canada is a small open economy. a) If the world interest rate is equal to 5, what are net exports? Is Canada lending or borrowing from the rest of the world? b) The country of...
(22)
In the short run, contractionary monetary policy causes output
to _______________ and prices to _______________.
rise; rise
rise; fall
fall; rise
fall; fall
(23)
As the graph illustrates, consumers are worried about the
future and have begun saving more money. If the Fed does
not intervene in this situation, what will happen
to the price level in the long run?
Prices will increase.
Prices will stay the
same.
Prices will decrease.
There is insufficient
information to...
t t Question 1 (5 marks) I. Suppose money demand (on the horizontal axis) is plotted against the nominal interest rate on the vertical axis). This money demand curve will shift to the right when which of the following occurs? a. an increase in income. b. a reduction in the interest rate. c. an increase in the money supply. d. a decrease in the money supply. II. At the current interest rate, suppose the supply of money is less than...
4. If nominal money demand doubles and the real money supply also does what happens to the price level ( ). The price level increases by a factor of four b. The price level doubles ). The price level is unchanged. d. The price level falls by one-half. IL Short-Answer O stiens (19 points) 5. (7 points) If the Federal Reserve sold government securities, then the money supply (increase decrease remain the same), the money he would _(increase decrease remain...
Consider the economy of Wiknam. The consumption function is given by C = 250+ 0.6(Y-T). a. Government purchases and taxes are both 100. In the accompanying diagram, graph the IS curve for r ranging from 0 to 8 by dragging and dropping the end points to the correct locations b. The money supply M is 2,875 and the price level Pis 5. In the accompanying diagram, graph the LM curve for r ranging from 0 to 8 by dragging and...
Consider the economy of Wiknam. The consumption function is given by f. With the initial values for monetary and fiscal policy, suppose that the price level falls from 5 to 3. What happens ? What are the new equilibrium interest rate and level of income? C = 250+ 0.6(Y-T). The investment function is The LM curve shifts to the by about 383.33. I = 100-20r. What are the new equilibrium interest rate and level of income? The money demand function...
Money Demand According to Liquidity Preference Theery, why is the Money Demand curve downwaed sloping? a because interest rates rise as the Bank of Canada reduces the quantity of money demanded b. because interest rates fall as the Bank of Canada reduces the Money Supply c because people will want to hold less money as the cost of doing so fals d. because people will want to hold more money as the cost of doing so falls Money Demand and...
Most questions answered within 3 hours.
-
evaluate the statements below and select those that correctly apply
to the role of PAMPs and...
asked 6 minutes ago -
Congratulations! You have just won the Lottery. The Lottery
Commission informs you that you can choose...
asked 12 minutes ago -
bulk flow (in respiration) moves blood from?
Air in and out of lungs?
air into lungs?...
asked 17 minutes ago -
Which of the following describes a private network?
1. A wide area network (WAN) linking sites...
asked 31 minutes ago -
The purpose of this
lab: Wireshark Intro Lab
is to get students
familiar with the use of...
asked 40 minutes ago -
Question 3
A 50 percent deduction is allowed for amounts paid or incurred for
dues and...
asked 38 minutes ago -
Assuming that the wave speed varies little when sound waves are
traveling through a material that...
asked 53 minutes ago -
The rise of online shopping and Amazon, in particular, has
created major dilemmas for large food/CPG...
asked 52 minutes ago -
Is oxygen difluoride polar or nonpolar?
nonpolar
polar
ionic
none of the above
asked 1 hour ago -
Starting from rest, a car accelerates at a constant rate of 2.6
m/s2 for a time...
asked 1 hour ago -
A pharmaceutical company wants to answer the question whether
time for a drug in pill form...
asked 1 hour ago -
) Assume that in the market for widgets, demand is highly
elastic compared to supply. If...
asked 1 hour ago