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Suppose we had a case in which the interest elasticity of both money demand and investment demand...
suppose a country has perfectly interest elastic investment demand and low interest elasticity of money demand.Uesing...
suppose a country has perfectly interest elastic investment demand and low interest elasticity of money demand.Uesing Is-lm analysis, explain the effect of an increase in money demand due to non income determinant on the output and interest rate of this economy when money stock target is uesd as intermediate target. how the result differs from interest rate targeting? which option is better for the economy of this country;monetary or interest rate targeting? justify answer pleas.
Explain that fiscal policy is less effective than monetary policy in a situation when investment is...
Explain that fiscal policy is less effective than monetary policy in a situation when investment is very interest elastic and money demand is very interest inelastic.
Suppose that income elasticity of money demand is 0.8 and the interest rate elasticity of money...
Suppose that income elasticity of money demand is 0.8 and the interest rate elasticity of money demand is zero. Suppose that the central bank increases the money supply by 10% and real income increases by 3%. Assuming that the real interest rate is 4%, what will be the equilibrium nominal interest rate? (a) 10%. (b) 11.6%. (c) 7.6%. (d) 12.4%.
(b) (5 Marks) The following figure illustrates the money demand and investment demand for the economies...
(b) (5 Marks) The following figure illustrates the money demand and investment demand for the economies of Argos and Spartak (subscipted A and s). Interest rate Interest rate STA 0 80 400 0 100 160 240 320 Quantity of money 20 40 60 80 Quantity of investment a) b) If the money supply is increased by $80 in both economies, what will be the new interest rate in Argus and in Spartak? What will be the increase in investment spending...
10. Suppose that income elasticity of money demand is 0.8 and the interest rate elasticity of...
10. Suppose that income elasticity of money demand is 0.8 and the interest rate elasticity of money demand is zero. Suppose that the central bank increases the money supply by 10% and real income increases by 3%. Assuming that the real interest rate is 4%, what will be the equilibrium nominal interest rate? (a) 10%. (b) 11.6% (e) 7.6%. (d) 12.4%
By late summer of 2010, the target federal funds rate was between zero and 0.25%. At...
By late summer of 2010, the target federal funds rate was between zero and 0.25%. At the same time, "animal spirits" were dormant and there was excess capacity in most industries. That is, businesses were in no mood to build new plant and equipment if they were not using their already existent capital. Interest rates were at or near zero and yet investment demand remained quite low. The unemployment rate was 9.6% in August 2010. These conditions suggest that monetary...
we know that United States is at least using both monetary policy (by lowering the interest...
we know that United States is at least using both monetary policy (by lowering the interest rate to be 0%) and fiscal policy (by having 2 trillion USD ready for spending on infrastructures). Given the current condition with the corona virus pandemic still ongoing, and the lock down has not been lifted, How successful do you think the monetary policy (only) would be? and why? How successful do you think the fiscal policy (only) would be? and why? How successful...
4) Suppose in the economy in the next couple years, bitcoin and other alternatives to money...
4) Suppose in the economy in the next couple years, bitcoin and other alternatives to money become even more popular. As a result, money demand (demand for $) goes down. a) Draw IS/LM and AD/AS diagrams, label the initial long-run equilibrium. Now show the effect of the decrease in money demand on both diagrams and label the short-run equilibrium. b) If policymakers do nothing, what will happen in the long-run after this decrease in money demand? c) Suppose instead that...
In an economy where the money supply and aggregate demand have been decreased by the Central...
In an economy where the money supply and aggregate demand have been decreased by the Central Bank, you know that the Central Bank is using 答案选项组 a contractionary monetary policy. an expansionary monetary policy. a loose monetary policy. follow expansionary fiscal policy How does monetary policy affect the market? 答案选项组 Monetary policy has a more of an impact on consumption than investment. Monetary policy has a more of an impact on government spending than investment. Monetary policy has an indirect...
Macropoland is currently experiencing a recession--consumption and investment are very sluggish, and unemployment is quite high...
Macropoland is currently experiencing a recession--consumption and investment are very sluggish, and unemployment is quite high at 9%. Currently, inflation is very low at 0.4% (the historical average rate of inflation is about 2%). The Macropolish President has just hired you as her economic adviser. Your job is to prescribe policy that would enable the economy to recover from the recession. Explain how you could use the standard tools of expansionary monetary policy and expansionary fiscal policy to stimulate this...
(b) (5 Marks) The following figure illustrates the money demand and investment demand for the economies of Argos and Spartak (subscipted A and s). Interest rate Interest rate STA 0 80 400 0 100 160 240 320 Quantity of money 20 40 60 80 Quantity of investment a) b) If the money supply is increased by $80 in both economies, what will be the new interest rate in Argus and in Spartak? What will be the increase in investment spending...
10. Suppose that income elasticity of money demand is 0.8 and the interest rate elasticity of money demand is zero. Suppose that the central bank increases the money supply by 10% and real income increases by 3%. Assuming that the real interest rate is 4%, what will be the equilibrium nominal interest rate? (a) 10%. (b) 11.6% (e) 7.6%. (d) 12.4%
By late summer of 2010, the target federal funds rate was between zero and 0.25%. At the same time, "animal spirits" were dormant and there was excess capacity in most industries. That is, businesses were in no mood to build new plant and equipment if they were not using their already existent capital. Interest rates were at or near zero and yet investment demand remained quite low. The unemployment rate was 9.6% in August 2010. These conditions suggest that monetary...
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