On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the long-run effects of the increase in the moneysupply.INFLATION RATE (Percent)UNEMPLOYMENT RATE (Percent)6In the long run, the increase in the money supply results in(relative to the economy's initial equilibrium).in the inflation rate andin the unemployment rate. 4. Monetary policy and the Phillips curvethe following oSuppose the central bank of the hypothetical economy decides to increase the money supply.On the following graph, shift the curve or drag the blue point along the curve, c do both, to show the short-run effects of this policy.Hint: You may assume that the central bank's move was unanticipated.unemployment rate.In the short run, an unexpected increase in the money supply results inin the inflation rate andin the2UNEMPLOYMENT RATE (Percent)a hypothetical economy. The given point on the graph indicates the initial rates ofAssume that the economy is currently in long-run equilibrium.360INFLATION RATE (Percent)SR Pips Curve.SR Phillips Curve

It can be defined as a form of graphical of the concept of economics which shows the rate of…

Answered: on the following graph, shift the curve…

on the following graph, shift the curve or drag the blue point along the curve, or do both, to show the long-run effects of the increase in the money supply INFLATION RATE (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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On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the long-run effects of the increase in the money supply. 6 8 10 12 UNEMPLOYMENT RATE (Percent) In the long run, the increase in the money supply results in in the inflation rate and in the unemployment rate (relative to the economy's initial equilibrium). INFLATION RATE (Percent)
State whether the following statements are true, false, or uncertain and explain. -Over the past 30 years, country A experienced an average money growth rate of 5 percent and an average inflation rate of 4 percent. This pattern is inconsistent with the quantity theory of money (QTM) -Chase Bank removed the ATM machine located in the lobby of Susan’s building. The Baumol-Tobin model of money demand predicts that Susan’s demand for money will go up
What Can the Fed Do about Inflation? In the article by Thomas Hogan, we learn that Russia's invasion of the Ukraine nor the shortage or supply chain issues has not derived the main causes of inflation. (Hogan, 2022) The main cause for the issues that we have been facing come directly from the constant price changes and the monetary policy that is currently in place. We learn that with Federal Open Market Committee (FOMC) has not adjusted their monetary policy, and have been raising the rates in such small increments that is causing the inflation to continue in an upward trend. What needs to occur is the FOMC needs to raise interest rates in greater scales in order the combat the inflation that is taking place and stabilize the price levels that are out there. (Hogan, 2022) What needs occur is that the Fed needs to come up with a policy that will allow for a predetermined path that slows down and regulating the money growth back to a safe place. Having the guidance from the article…
Using the Quantity Theory of Money, derive an expression for the rate of inflation for the case when the velocity of money is not a constant and use it to explain the pre-1990 and post-1990 curves on slide 32 of lecture 16.
Policies and Policymakers “Bank Indonesia (BI) has emphasized that it will not print money to help fund the surge in government spending to fight the COVID-19 pandemic. BI Governor Perry Warjiyo said the suggestion to print money was not a prudent monetary policy, pledging that the central bank would never take the measure. “This is an unusual policy and BI will never take such measures, including giving out money to the general public to face the COVID-19 pandemic,” Perry told reporters on Wednesday. “I am very sorry, but we should not confuse the public.”” -The Jakarta Post Why did BI decide on the prudent policy, which is to not to print money despite the fear of economic recession due to Covid-19 pandemic? What are other policy options for a central bank during the crisis?
Draw and properly label three graphs of money supply-money demand (in one graph), investment demand, and AD-AS (6%). Then, referring to the graphs in your explanation, use one of the three traditional monetary tools to explain how the monetary transmission mechanism works to close recessionary and also inflationary gaps. (9%)
Suppose that the money supply grows at 5 percent. Suppose that real GDP or output grows at 7 percent. According to the Quantity Theory of Money, what should the inflation rate be? Please express your answers as a percentage. Also, make sure to round your answers to the nearest 100th decimal points. For example, write 2.67 for 2.67 percent. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Between 1950 and 1975, the average annual rate of change in the money supply was slightly less than 4 percent. Has the Fed expanded the money supply more (or less) rapidly than this 4 percent long-term rate during the past 12 months? The past 24 months? Is the Fed's current monetary policy restrictive or expansionary? Explain.
Suppose the inflation rate is zero, the income elasticity of money demand is 0.75, and the interest elasticity of money demand is -0.25. Determine the inflation rate that results from each of the following events (starting back at zero for each one). Enter all answers as integers with no decimal places. If negative, be sure to include the minus sign before the number (no spaces). i. The nominal money supply increases 10%. The inflation rate is now _% ii. Real income increases 8%. The inflation rate is now _%
With the aid of a well-labeled diagram, carefully explain the impact on the money market if there was a discovery of gold that fuels inflation. Give explanation of the diagram
Actions by the Fed to fight rising rates of inflation likely will initially: (a) reduce long-term interest rates; (b) expand the size of the Fed’s balance sheet; (c) cause the Treasury Department to issue fewer repurchase agreements; (d) increase short-term interest rates
Consider the following simple monetary rules estimated for two different periods, 1969-1985 and 1985-2005, and interpret each rule. During which period does the Fed appear to be most anti- inflation? Explain your answer. Monetary Policy Rule Period 1969-1985 R₁ = 6.35 +0.67 (π, t-π) 1985-2005 R 1.35 +1.34 (tn) (Source: Estimated using FRED II data)