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- Does the old agent consume more with a growing money stock and transfers than in the equilibrium without money stock growth and transfers?In words, explain the intuition of this result. Pls no plagiarism7) Explain what is meant by the ‘Zero Lower Bound’ in relation to interest rates and suggest how it might be avoided.If nominal GDP for 2017 is $62 trillion and real GDP for 2017 is $46 trillion, then the GDP deflator for 2017 is (Round your response to two decimal places.)
- 5. Explain the major assumptions of the basic EOQ model.In the liquidity-preference theory of interest, the quantity of money demanded forspecultative purposes will ordinarily: A. increase with a rise in the interest rate B. increase with a fall in the interest rate C. Decrease with a fall in the interest rate D. Remain constant when the interest rate risesRefer to the graph below and suppose that the economy begins in long-run equilibrium. Which point best represents the new outcome when banks' capital requirements rise? 4.5% 3% 1.5% ● b · a d (c) (a) -2% 0% (b) (d) 2% LM la
- 4. In aggregate operations planning, both pricing and promotion are options to shift demand to align more closely with capacity. True False6. Delegated Monitoring Model: Suppose the central bank has increased the interest rate and depositors now require a 10% return instead. All other parameters are exactly the same as in the notes. Calculate the expected profits for the borrowers and the bank, and intuitively explain how they are different from the case when the required return is 5%.At the October 31-November 1st FOMC meeting, the interest rate pause continued despite new data indicating strong spending growth. One of the factors that contributed to maintaining the pause was high and rising yields on the 10 year Treasury note. Explain why this would influence the FOMC not too raise interest rates. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- Many people hire a local. The rent must be paid in advance on the last of each month. Due to liquidity problems, he will not pay the rent due on the last day of March until 10 May. The landlord, who previously wanted to get rid of him as a tenant, dismisses him as a tenant on 14 May, referring to the fact that the tenancy has been forfeited due to Mange's delay in rent. Mange gets desperate and refers to the fact that he actually paid the rent, albeit a little late. What appliesStock market bubbles are welfare enhancing since they relax financial constraints and allows constrained firms to invest in positive NPV projects which was otherwise not possible. Following this finding, a government intent on improving corporate welfare could inject liquidity in the firm finance market and this should boost investment spending for even the constrained firms. Bubbles are essentially liquidity in this framework. Select one: O True O Falseassume (i) Consumers spend $200 billion plus 80% of after-tax income, or C=200+0.8 Yd (ii) Investment demand varies inversely with the interest rate, such that I= 500-2000r (iii) Currently government spending and taxes are both $250 billion, or G=250 and Tx=250, (iv) The total money demand or liquidity preference schedule for this economy is an inverse function of the rate of interest and is given by the equation MD=850-1000r (v) The required reserve ratio for banks in this economy is 20%. No bank holds excess reserves, and everybody keeps their money in the bank. The total of reserves in the banks is $150 billion. Answer the following questions given the information above. a) The central bank wants national income to be $3000 billion. What must investment be for the equilibrium level of national income to be $3000 billion (if investment alone changes in response to the change in the interest rate)? b) At what interest rate is this level of investment (your answer to part (a))…
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