PRICE LEVELAdjust the graph to show the long-run effect of an unanticipated restrictive monetary policy on the goods and services market by dragging theaggregate demand (AD) curve, the short-run aggregate supply (AS) curve, or both.nd Study Toolsptionsuccess TipsThe Market for Goods and Servicesuccess TipsFOR YOUASADy ToolsASor Principles ofADedbackREAL GDP85 F Partly sunny 6. Monetary policy in the long runConsider a hypothetical economy that produces at its long-run macroeconomic equilibrium at a price level of 100.Suppose the real GDP of this economy grows at an annual rate of 2%. If the velocity of money is constant, the central bank can maintain the pricelevel at 100 by means of which of the following?Expanding the money supply by 2% per yearO Reducing the money supply by 2% per yearles ofO Keeping the money supply constantSuppose the central bank enacts an unanticipated restrictive monetary policy. As a result, the supply of loanable fundsleading to ain short-term interest rates.The following graph shows the goods and services market of this economy at full employment. Assume that potential output remains constant.Adjust the graph to show the long-run effect of an unanticipated restrictive monetary policy on the goods and services market by dragging the5118/2/aggregate demand (AD) curve, the short-run aggregate supply (AS) curve, or both.85 F Partly sunnyto search

Price level = 100 Real GDP = 2% V= constant According to Quantity theory of money: MV = PT M-Money…

Consider a hypothetical economy that produces at its long-ruń macroeconomic equilibrium at a price level of 100. Suppose the real GDP of this economy grows at an annual rate of 2%. If the velocity of money is constant, the central bank can maintain the price level at 100 by means of which of the following? O Expanding the money supply by 2% per year OReducing the money supply by 2% per year O Keeping the money supply constant leading to a Suppose the central bank enacts an unanticipated restrictive monetary policy. As a result, the supply of loanable funds in short-term interest rates. The following graph shows the goods and services market of this economy at full employment. Assume that potential output remains constant.

Consider a hypothetical economy that produces at its long-ruń macroeconomic equilibrium at a price level of 100. Suppose the real GDP of this economy grows at an annual rate of 2%. If the velocity of money is constant, the central bank can maintain the price level at 100 by means of which of the following? O Expanding the money supply by 2% per year OReducing the money supply by 2% per year O Keeping the money supply constant leading to a Suppose the central bank enacts an unanticipated restrictive monetary policy. As a result, the supply of loanable funds in short-term interest rates. The following graph shows the goods and services market of this economy at full employment. Assume that potential output remains constant.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Assume, in the 3rd quarter of 2018 in the U.S., the velocity of money was 3.08 and the M2 money supply was $1,050 million. The average prices in the economy was $1.44. Based on this, what was the real GDP of the U.S. in the 3rd quarter of 2018. O a. $2,750 million Ob. $1,250 million O C. $2,000 million O d. 52.250 million
Need hlep with this economics question
Using the quantity equation of money MV PQ, calculate the price level (P) if the money supply (M) is 1000, velocity (V) equals 2, and the real GDP (Q) equals 200. Select the correct answer below: O 1500 O 3.5 45 O 10
4
According to the Quantity Theory of Money, if the velocity of money is constant, and if the money supply increases, while at the same time real GDP decreases, then, ceteris paribus, it follows that in the long run: Select one: O a. the price level will increase - i.e. the economy will experience inflation. O b. the price level will decrease - i.e. the economy will experience deflation. O c. nominal GDP must be decreasing. O d. none of the above is mathematically possible.
2. Suppose that the money market can be depicted in the graph below. Interest rate (M/P)² (M³/P)⁰ (M³/P)1 H A K O B C O E L3 L1 L2 Quantity of Money LI is the original demand for money by the public and (M/P) is the real money supply. Assume tha the price level does not change. The original equilibrium is at point O. Suppose that the government lowered income taxes so that consumers had more disposable income. Briefly describe how you reached that conclusion. Identify the new equilibrium point and what happens to interest rates
Which set of actions could the central bank use to increase the money supply? Select one: O a. an open market purchase and a tax cut O b. a discount rate cut and an open market sale O c.a reduction in the required reserve ratio and an open market purchase O d. a reduction in the required reserve ratio and an open market sale
Suppose you read in the Wall Street Journal that the Fed was "increasing its target interest rate." It follows that the rate in question is the and one way in which Fed could achieve its new, higher target rate is by Select one: O a. Federal Funds Rate; conducting an open market sale O b. Federal Funds Rate; conducting an open market purchase O c. Prime Rate; conducting an open market sale d. Prime Rate; conducting an open market purchase
Please no written by hand solution tle shifts the Central Bank rule to the right. O a. An increase in the Z factors O b. A decrease in the price level O c. An increase in government spending O d. A decrease in government spending
2. Create the T-entry for the Fed that goes together with the choice in the question above
The money stock measured as M1 is growing at the rate of 5% per year. If real GDP is growing at 2% per year, and the income velocity of circulation of money is constant, Select one: the economy will achieve noninflationary growth O b. the inflation rate will be around 1%. O c. the inflation rate will be around 5% O d. the inflation rate will be around 3%.
Using the simple monetary rule Rt-r=m(T-), if m=0.5 and the inflation rate is 2 percent below the target inflation rate, the Federal Reserve will A. raise the marginal product of capital by 1 percent. B. lower the interest rate by 1 percent. O C. raise the interest rate by 1 percent. OD. lower the marginal product of capital by 1 percent. O E. lower the target rate by 2 percent.