3. The clasSical dichotomy and the neutrality of moneyThe classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction.Ginny spends all of her money on magazines and donuts. In 2015, she earned $14.00 per hour, the price of a magazine was $7.00, and the price of adonut was $2.00.Which of the following give the nominal value of a variable? Check all that apply.The price of a donut is 0.29 magazines in 2015.O Ginny's wage is 2 magazines per hour in 2015.O The price of a donut is $2.00 in 2015.Which of the following give the real value of a variable? Check all that apply.The price of a magazine is $7.00 in 2015.O Ginny's wage is $14.00 per hour in 2015.O The price of a magazine is 3.5 donuts in 2015.Suppose that the Fed sharply increases the money supply between 2015 and 2020. In 2020, Ginny's wage has risen to $28.00 per hour. The price of amagazine is $14.00 and the price of a donut is $4.00.In 2020, the relative price of a magazine isand the real value of her wageBetween 2015 and 2020, the nominal value of Ginny's wageMonetary neutrality is the proposition that a change in the money supplynominal variables andrealvariables.

The nominal value is measured by taking prices at the time of measurement an dthe real value is…

Answered: 3. The clasSical dichotomy and the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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Homework (Ch 21) Consider a hypothetical economy in which households spend $0.50 of each additional dollar they earn and save the remaining $0.50. The following graph shows the economy's initial aggregate demand curve (AD₁). Suppose the government increases its purchases by $3 billion. Use the green line (triangle symbol) on the following graph to show the aggregate demand curve (AD2) after the multiplier effect takes place. Hint: Be sure the new aggregate demand curve (AD2) is parallel to AD₁. You can see the slope of AD₁ by selecting it on the following graph. PRICE LEVEL 116 114 112 110 108 106 104 102 100 100 AD1 102 112 104 106 108 110 OUTPUT (Billions of dollars) 114 116 AD₂ AD 3
3. The classical dichotomy and the neutrality of money The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction. Poornima spends all of her money on magazines and donuts. In 2015, she earned $27.00 per hour, the price of a magazine was $9.00, and the price of a donut was $3.00. Which of the following give the nominal value of a variable? Check all that apply. O The price of a donut is $3.00 in 2015. O Poornima's wage is $27.00 per hour in 2015. O The price of a donut is 0.33 magazines in 2015. Which of the following give the real value of a variable? Check all that apply. O The price of a magazine is 3 donuts in 2015. O Poornima's wage is 9 donuts per hour in 2015. O The price of a magazine is $9.00 in 2015. Suppose that the Fed sharply increases the money supply between 2015 and 2020. In 2020, Poornima's wage has risen to $54.00 per hour. The price of a magazine is $18.00 and the price of a donut is…
1. In the UK, during the Fall 2017 the key interest rate increased by 25 basis points. For a considerable time, the inflation rate was close to 3% and the pound depreciated due to Brexit and substantial debt. Use graphs and models to analyse the effects on all markets (real money balances market, IS-LM model). Explain effects on real interest rate, money demand and money supply.
What is the demand for money? When the nominal interest rate rises, does the opportunity cost of holding money increase or decrease? Does the quantity of money demanded increase or decrease? The demand for money is the relationship between the quantity of money demanded and the _______ when all other influences on the amount of money that people wish to hold remain the same. A. price of bonds B. real interest rate C. inflation rate D. nominal interest rate When the nominal interest rate rises, the opportunity cost of holding money _______ and the quantity of money demanded _______. A. falls; increases B. rises; decreases C. falls; decreases D. rises; increases
In an economy where the central bank implements negative interest rates as a monetary policy tool, what is the most likely short-term impact on consumer savings behavior and bank profitability? A. An increase in consumer savings as people seek to safeguard their money and a rise in bank profitability due to increased lending. B. A decrease in consumer savings as the incentive to save diminishes and a decrease in bank profitability due to lower interest margins. C. No significant change in consumer savings behavior but an improvement in bank profitability due to lower borrowing costs. D. A shift in consumer investment towards riskier assets and challenges in bank profitability due to compressed interest margins. Please don't use chatgpt it is giving wrong answer and please provide valuable answer
Q47 Which of the following is the definition for the real supply of money? Select one: a. the actual quantity of money, rather than the officially reported quantity. b. the stock of high powered money only. c. the ratio of the real GDP to the nominal money supply. d. the stock of money measured in terms of goods, not dollars.
21.According to the quantity theory of money, ultimate control over the rate of inflation in the United States is exercised by: A)the Organization of Petroleum Exporting Countries (OPEC). B)the U.S. Treasury. C)the Federal Reserve. D)private citizens. 22.According to the quantity theory of money, if money is growing at a 10 percent rate and real output is growing at a 3 percent rate, but velocity is growing at increasingly faster rates over time as a result of financial innovation, the rate of inflation must be: A)increasing. B)decreasing. C)7 percent. D)constant. 23.If the money supply increases 12 percent, velocity decreases 4 percent, and the price level increases 5 percent, then the change in real GDP must be ______ percent. A)3 B)4 C)9 D)11 24.Percentage change in P is approximately equal to the percentage change in: A)M. B)M minus percentage change in Y. C)M minus percentage change in Y plus percentage change in velocity. D)M minus…
please dont make a humungous run on paragraph of an answer/explanation I need to know what I'm reading And answer as soon as possible
Figure 31-3 On the following graph, MS represents the money supply and MD represents money demand. VALUE OF MONEY 0.6 0.45 5000 MS. MS. 9000 QUANTITY OF MONEY MO Refer to Figure 31-3. At the end of the first year, the relevant money-supply curve was the one labeled MS]. At the end of the second year, the relevant money-supply curve was the one labeled MS2. Assuming the economy is always in equilibrium, what was the economy's approximate inflation rate for the second year? 8.3 percent -33 percent 33 percent -25 percent
Which of the following statements about money that is correct? A. Inflation brings a rising value of money. B. A work of art is an example of money because it can act as a store of value. C. Money is a completely stable store of value. D. Without a medium of exchange, goods and services must be exchanged directly for other goods and services.
The neutrality of money revisited a. Fill in the empty spaces after Year 1 in the chart below: b. What is the growth rate of the nominal money supply between years 1 and 2, 2 and 3, and 3 and 4? c. What is the rate of inflation between years 1 and 2, 2 and 3, and 3 and 4? d. What is the change in the real money supply between years 1 and 2, 2 and 3, and 3 and 4? e. What assumption has been made about real output growth if this data describe the medium run?
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