Please help me with drawing and explanations of all foursteps. The axes should be Money Supply (as X) andMoney Value (as Y).(KEY QUESTION) Draw the supply/demand for money diagram to show the following effects:a. Assume that the economy records an increase in real GDP. Show the effect of this on moneydemand. Assuming the central bank does not respond, how will this affect the value of moneyand the equilibrium price level?b. Now assume that the central bank does respond to this change in order to keep the price levelat the original level. How should they go about it? Show their action on a diagram.c.Returning to part a, assume that together with the increase in GDP there is a decrease in thevelocity of money. First explain what exactly this means, and then describe how your answersin parts a. and b. change, using a new diagram.d. Now consider a new situation (i.e. disregard the changes in the previous parts). Assume that thecentral bank increases the amount of money in the economy, but there is no change in GDP normoney velocity. Show the situation in a new diagram and describe your reasoning.

We take a (Money supply - Money Value ) framework in order to explain the demand and supply in money…

EY QUESTION) Draw the supply/demand for money diagram to show the following effects: a. Assume that the economy records an increase in real GDP. Show the effect of this on money demand. Assuming the central bank does not respond, how will this affect the value of money and the equilibrium price level? b. Now assume that the central bank does respond to this change in order to keep the price level

EY QUESTION) Draw the supply/demand for money diagram to show the following effects: a. Assume that the economy records an increase in real GDP. Show the effect of this on money demand. Assuming the central bank does not respond, how will this affect the value of money and the equilibrium price level? b. Now assume that the central bank does respond to this change in order to keep the price level

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

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Step 1: Define the money demand & supply

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Step 2: Explain the changes in demand and supply for increase in GPD

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Step 3: Explain the changes in demand and supply when central bank gets involved

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Step 4: Explain the changes in demand and supply when velocity changes

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This is multiple choice question, Pls solve it quickly !!
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