8 7 5 4 3 2 MD 100 200 300 400 500 600 Real money (billions of 2005 yuks) The figure above shows the demand for money in Kiteland. a. If the Kiteland Central Bank has set the quantity of money so that the equilibrium interest rate is 4 percent, draw the supply of money curve. b. Suppose that Kiteland's Central Bank wants to raise the interest rate by 1 percentage point. By how much must it change the quantity of real money? c. In order to change the quantity of money to raise the interest rate by one percentage point, if the Central Bank uses an open market operation, does it make an open market purchase or an open market sale? Explain your answer. Interest rate (percent p

8 7 5 4 3 2 MD 100 200 300 400 500 600 Real money (billions of 2005 yuks) The figure above shows the demand for money in Kiteland. a. If the Kiteland Central Bank has set the quantity of money so that the equilibrium interest rate is 4 percent, draw the supply of money curve. b. Suppose that Kiteland's Central Bank wants to raise the interest rate by 1 percentage point. By how much must it change the quantity of real money? c. In order to change the quantity of money to raise the interest rate by one percentage point, if the Central Bank uses an open market operation, does it make an open market purchase or an open market sale? Explain your answer. Interest rate (percent p

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter24: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 5CQQ

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Question 2 Not yet answered Marked out of 5.00 7 P Flag question 6 4 3 MD 1 100 200 300 400 500 600 Real money (billions of 2009 yuks) The figure above shows the demand for money in Kiteland. a) If the Kiteland Central Bank has set the quantity of money so that the equilibrium interest rate is 4 percent, draw the supply of money curve. (1 Mark) b) Suppose that Kiteland's Central Bank wants to raise the interest rate by 1 percentage point. By how much must it change the quantity of real money? c) In order to change the quantity of money to raise the interest rate by one percentage point, if the Central Bank uses an open market operation, does it make an open market purchase or an open market sale? Explain your answer. (2 Marks) (2 Marks) Interest rate (percent per yen)
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I dont know if I plotted the lines correclty and answered the questions right.