Figure 31-3 On the following graph, MS represents the money supply and MD represents money demand. 0.45 MS, MS 5000 9000 QUANTITY OF MONEY 9 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

Figure 31-3 On the following graph, MS represents the money supply and MD represents money demand. 0.45 MS, MS 5000 9000 QUANTITY OF MONEY 9 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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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E4 Assume the real money demand of an economy is:(Md/P) = 2×Yb(r + πe)-awhere 0 < b < 1 and 0 < a < 1.a) Use the real money demand above to determine the velocity of money.b) Does the quantity theory of money hold in this economy? Explain.c) Show with calculus how the velocity of money reacts to a change in output and a changein the nominal interest rate.d) Find the income and the nominal interest rate elasticities of money demand.
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Question 5. Suppose that an economy has the real GDP growth of 1% in a given year, the money supply decreases 1%, velocity of money increases 5%, and real interest rate is constant at 3%. a. How much is the inflation rate? b. According to the Fisher equation, how much is the nominal interest rate?
Give typing answer with explanation and conclusion
a. C. Figure 30-2. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes. d. 1.125 0.875 it 0.75 0.625 05. 0.375 + 0.25 + 0.125 + d 84. Refer to Figure 30-2. At the end of 2009 the relevant money-demand curve was the one labeled MD2. At the end of 2010 the relevant money-demand curve was the one labeled MD₁. Assuming the economy is always in equilibrium, what was the economy's approximate inflation rate for 2010? -43 percent b. -57 percent MS 57 percent 75 percent 5,000 MD₂ MD₁
Assume that investment, government expenditures, taxes are autonomous.C = 2000 + 0.65* (Y-T)I = 900 – 50iG = 400T = 1500M = 1000P = 2L = 0.50Y-25ia.What is the value of the sensitivity money demand to the level of income?b.What is the value of the nominal supply?c.What expression represents the IS curve?d.What is the equilibrium interest rate, i*?e.What is the equilibrium income, Y*?
3. An economy has full-employment output of 1000. The other aggregates are as follows Cd = Id = 200+0.8(YT) - 500r 200-500r G = 196 T = 20+0.25Y Money demand is Md P = 0.5Y -250(r+π²) where expected rate of inflation л² = 0.10. The nominal supply of money M = 9890. 3.1 What are the general equilibrium values of the real interest rate, price level, consumption, and and investment?. 3.2 Suppose that government purchases are increased to G = 216. What are the new gen- eral equilibrium values of the real interest rate, the price level, consumption, and and investment?.
3. The long-run effects of monetary policy The following graphs show the state of an economy that is currently in long-run equilibrium. The first graph shows the aggregate demand (AD) and long-run aggregate supply (LRAS) curves. The second shows the long-run and short-run Phillips curves (LRPC and SRPC). PRICE LEVEL 0 2 LRAS 4 6 8 OUTPUT (Trillions of dollars) 10 AD 12 AD LRAS
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HW 9 EQ 2) Hey, I need help with the following econ question. Thank you in advance! According to the quantity theory of money, if in a year's time, real GDP grew from $10 trillion to $10.2 trillion, and nominal GDP for the same time period grew from $10 trillion to $10.5 trillion, what is the growth rate of money supply? And the inflation rate?
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9. Which of the following will result in expansionary monetary or fiscal policy being the LEAST effective in increasing real GDP? A. The LRAS curve has a negative slope B. Aggregate demand is less elastic than aggregate supply C. Wages and prices are very flexible and change quickly in reaction to policy changes D. The SRAS curve is perfectly elastic