PLEASE SLOW THE PLOTS FOR THE GRAPHS. There are plots needed for money demanded and 2 plots for MS1 and MS2 In the following table, fill in the column labeled Value of Money.Price Level (P) Value of Money (1/P)0.801.001.33VALUE OF MONEY2.00Now consider the relationship between the quantity of money that people demand and the price level. The lower the price level, therequired to complete transactions, and themoney people will want to hold in the form of currency or demand deposits.Assume that the Federal Reserve initially fixes the quantity of money supplied at $3.5 billion.2.00Use the orange line (square symbol) to plot the initial money supply (MS₁) set by the Fed. Then, referring to the previous table, use the blueconnected points (circle symbol) to graph the money demand curve.1.751.501.251.000.7500.500.25Quantity of Money Demanded(Billions of dollars)1.50123456QUANTITY OF MONEY (Billions of dollars)2.03.577.0According to your graph, the equilibrium value of money is8MS₁Money DemandMS₂therefore the equilibrium price level isNow, suppose that the Fed increases the money supply from the initial level of $3.5 billion to $7 billion.In order to increase the money supply, the Fed can use open market operations tothe public.money Use the purple line (diamond symbol) to plot the new money supply (MS2).than theImmediately after the Fed changes the money supply from its initial equilibrium level, the quantity of money supplied isquantity of money demanded at the initial equilibrium. This expansion in the money supply willpeople's demand for goods and services.In the long run, since the economy's ability to produce goods and services has not changed, the prices of goods and services willvalue of money willand the

The money demand curve is downward sloping. The money supply curve is vertical in nature.…

In the following table, fill in the column labeled Value of Money. Price Level (P) Value of Money (1/P) 0.80 1.00 1.33 2.00 Quantity of Money Demanded (Billions of dollars) 1.5 2.0 3.5 7.0 Now consider the relationship between the quantity of money that people demand and the price level. The lower the price level, the required to complete transactions, and the money people will want to hold in the form of currency or demand deposits. mone

In the following table, fill in the column labeled Value of Money. Price Level (P) Value of Money (1/P) 0.80 1.00 1.33 2.00 Quantity of Money Demanded (Billions of dollars) 1.5 2.0 3.5 7.0 Now consider the relationship between the quantity of money that people demand and the price level. The lower the price level, the required to complete transactions, and the money people will want to hold in the form of currency or demand deposits. mone

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

PLEASE SLOW THE PLOTS FOR THE GRAPHS. There are plots needed for money demanded and 2 plots for MS1 and MS2

In the following table, fill in the column labeled Value of Money.
Price Level (P) Value of Money (1/P)
0.80
1.00
1.33
VALUE OF MONEY
2.00
Now consider the relationship between the quantity of money that people demand and the price level. The lower the price level, the
required to complete transactions, and the
money people will want to hold in the form of currency or demand deposits.
Assume that the Federal Reserve initially fixes the quantity of money supplied at $3.5 billion.
2.00
Use the orange line (square symbol) to plot the initial money supply (MS₁) set by the Fed. Then, referring to the previous table, use the blue
connected points (circle symbol) to graph the money demand curve.
1.75
1.50
1.25
1.00
0.75
0
0.50
0.25
Quantity of Money Demanded
(Billions of dollars)
1.5
0
1
2
3
4
5
6
QUANTITY OF MONEY (Billions of dollars)
2.0
3.5
7
7.0
According to your graph, the equilibrium value of money is
8
MS₁
Money Demand
MS₂
therefore the equilibrium price level is
Now, suppose that the Fed increases the money supply from the initial level of $3.5 billion to $7 billion.
In order to increase the money supply, the Fed can use open market operations to
the public.
money

Use the purple line (diamond symbol) to plot the new money supply (MS2).
than the
Immediately after the Fed changes the money supply from its initial equilibrium level, the quantity of money supplied is
quantity of money demanded at the initial equilibrium. This expansion in the money supply will
people's demand for goods and services.
In the long run, since the economy's ability to produce goods and services has not changed, the prices of goods and services will
value of money will
and the

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