An increase in the level of nominal aggregate output (Y) and the purchase of government securities by the central bank Select one: a. money supply unchanged, money demand decrease and interest rate decrease O b. money supply increase, money demand increase, interest rate uncertain O c. money supply increase, money demand unchanged, interest rate decrease d. money supply decrease, money demand unchanged, interest rate increase money supply decrease, money demand decrease, interest rate increase ge Next page

An increase in the level of nominal aggregate output (Y) and the purchase of government securities by the central bank Select one: a. money supply unchanged, money demand decrease and interest rate decrease O b. money supply increase, money demand increase, interest rate uncertain O c. money supply increase, money demand unchanged, interest rate decrease d. money supply decrease, money demand unchanged, interest rate increase money supply decrease, money demand decrease, interest rate increase ge Next page

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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What are the Fed's monetary policy instruments, and what influences the level at which the Fed sets them? The Fed's monetary policy instruments are _______. A. the core inflation rate and the quantity of money B. the quantity of money and the quantity of bank reserves C. the quantity of bank reserves and three interest rates D. the monetary base and the core inflation rate Thanks!
As a response to the 2020 virus-induced economic disruption, the Federal Reserve, lowered the Reserve Requirement for commercial banks and it resulted in Money supply increasing a. Money supply decreasing Ob. Inflation rate increasing Oc. Commercial Bank lending decreasing d.
What quantity is measured along the horizontal axis? the price level O the quantity of money O the real interest rate On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes. O the value of money 1.125- 1 0.875 0.75 0.625 + 05 0375 + 025 0.125- MS 5,000 MD₂ MD₁
Macmillan Learning b. A central bank reduces the rate of interest that it charges to commercial banks on loans. expansionary c. The Federal Reserve purchases bonds on the open market. O expansionary d. The Federal Reserve decreases the discount rate. expansionary O contractionary expansionary contractionary contractionary e. A central bank increases the percentage of deposits that banks are required to keep in vaults. O contractionary.
9. Changes in the demand for money and and monetary policy Suppose interest rates increased. Adjust the following graph to illustrate the described change. INTEREST RATE Money Supply QUANTITY OF MONEY MD₂ As a result of an increase in interest rates, the equilibrium interest rate does not change. The level of foreign direct investment Central banks' holdings of the currency Foreign demand for a country's goods The discount rate MD₁ Money Demand Money Supply rises Which of the following factors may also be responsible for a shift in the money demand curve? Check all that apply. and the equilibrium quantity of money
QUESTION 48 An increase in the money supply causes: O a. interest rates to rise, investment spending to rise, and aggregate demand to rise O b. interest rates to rise, investment spending to fall, and aggregate demand to fall O c. interest rates to fall, investment spending to fall, and aggregate demand to fall O d. interest rates to fall, investment spending to rise, and aggregate demand to rise
2. Using a graph of money market demonstrate what happens to the value of money and the price level if :(a) The Fed sells government bonds in open-market operation.(b) A decrease in real GDP decreases the demand for money.
QUESTION 12 The dollar depreciates by 20 percent against the Euro. Powell should O Increase the monetary base by 20 percent Reduce the monetary base by 18 percent Reduce the moriey 22 percent. Do nothing Not enough information to answer this question QUESTION 13 Banks become more optimistic due to an improvement in the economy. The money multiplier increases by 10 percent. Powell should O Increase the monetary base by 20 percent O Reduce the monetary base by 8 percent O Reduce the money 22 percent O Do nothing O None ofthe above QUESTION 14 President Biden increases the government deficit to 10 percent of GDP. Powell should O Increase the money supply by 10 percent O. Reduce the money supply by 10 percent O Reduce the money supply by 12 percent O Do nothing O We do not have enough information to answer.
In the country Constantania, suppose the velocity of money is always the same. Last year, the money supply was $2 billion and real GDP was $5 billion. This year, the money supply increased by 6 percent, real GDP by 4 percent, and nominal GDP is $6.5 billion. a) Calculate the velocity of money and the price levels in the two years, and then calculate the inflation rate. b) Calculate the inflation rate using the formula AM/M + AV/V = AP/P + AY/Y, where the Greek letter A represents a change and the ratio AM/Mx 100 is the percentage change (or the rate of change) in M. Compare this result with the result you obtained in part a. Why could there be some difference? c) What is the difference between commodity money and fiat money? Why do people accept fiat currency in trade for goods and services?
Suppose that initially the money supply is S2 trillion, the price level equals 4, the real GDP is $6 trillion in base-year dollars, and income velocity of money is 12. Then the money supply increases by $200 billion, while real GDP and income velocity of money remain unchanged. a. According to the guantity theory of money and prices, calculate the new price level after the increase in money supply:.
Plz give me both answers I am give you Upvote 4 During a bout of hyperinflation, suppose the country of Weimar announces it will be rolling out a new currency, the Weimar Mark, which is worth 1 million Marks. Neutrality of money suggests this change will: Multiple Choice only change core inflation. not influence prices in the overall economy. None of these are true. dramatically decrease real wealth. 5. The relationship between the money supply, output, and the overall price level is illustrated by the: Multiple Choice aggregate price level. neutrality of money. classical theory of inflation. measure of real output.
The money demand curve has a a. negative slope because an increase in the interest rate decreases the quantity of money demanded. b. positive slope because an increase in the interest rate increases the quantity of money demanded. c. negative slope because an increase in the price level decreases the quantity of money demanded. d. positive slope because an increase in the price level increases the quantity of money demanded. 31. Contractionary monetary policy on the part of the Fed results in a. an increase in the money supply, an increase in interest rates, and an increase in GDP. b. a decrease in the money supply, an increase in interest rates, and a decrease in GDP. c. an increase in the money supply, a decrease in interest rates, and an increase in GDP. d. a decrease in the money supply, a decrease in interest rates, and a decrease in GDP.