Suppose that with the liquidity facilities and asset purchase programs, the Bank of Canada increased the money supply. How do you expect this to affect consumption and investment in equilibrium?
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Suppose that with the liquidity facilities and asset purchase programs, the Bank of Canada increased the money supply. How do you expect this to affect consumption and investment in equilibrium?
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- An increase in households’ desired money holding causes an increase in interest rates. How does this affect investment spending and aggregate demand?The SARB interest rate has been increasing since the beginning of this year. If the Monetary Policy Committee (MPC) decides to grow the economy. What impact does this have on the borrower, on wages and net exports? What is the overall effect on the economy? Use the relevant graphs.Are the inventories typically the least liquid of a firm 's current assets? How?
- What is the impact of a decrease in the money supply on the interest rate, income, consumption, and investment? (need a Macroeconomics way of answer)Why do higher interest rates reduce aggregate demand?Consider an economy that is characterized by the following equations: C = 150 + 0.65(Y - T) – 200r (Consumption) (Тахation) (Investment Demand) (Government Expenditure) (Exports) (Imports) T = 100 + 0.2Y I = 200 G = 500 - 200r X = 100 IM = 150 + 0.1(Y – T) – 100r (Money Demand) (Money Supply) L = -25 + 0.5Y - 500r M = 133,200 pSR = 120 (Short-Run Price Level) Answer each of the following questions. In your answers, be sure to state any assumptions that you impose and provide an explanation. Derive the AD and SRAS curves. Solve for the short-run equilibrium in the AD-SRAS model. Is your solution the same as in part 3 above? Why or why not? Is the fiscal multiplier in this economy larger or smaller than if the asset market were not accounted for in the model? Briefly explain. True or false? The aggregate demand curve is downward-sloping because the demand for goods and services increases as the price decreases. Briefly explain.
- If the government increases the income tax rate (t) and the central bank responds by increasing the supply of money, how will investment (I), saving (S) and money demand (md) be affected? Explain your answer with the help of an IS-LM diagram.Assume the economy starts at full-employment. There is a global pandemic. Which of the following will happen as a result of the pandemic (only the pandemic): Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a interest rates increase, aggregate expenditures decrease, prices decrease and output decreases interest rates decrease, aggregate expenditures increase, prices increase and output decreases C interest rates do not initially change, aggregate expenditures decrease, prices decrease and output decreases d interest rates do not initially change, aggregate expenditures increase, prices increase and output increasesThe last personal savings rate recorded by the Federal Reserve database was 2.4%. Assume your average tax rate is 35%. The Federal Government recently spent $1.2T on “infrastructure”. Assuming this stands, answer the following question. 1. How much disposable income would the third iteration of this spending generate? 1.1A. What is the estimated increase in aggregate demand as a result of this bill assuming no tax increase?
- Consider a closed economy where the goods and money markets are described by the following relationships: C = 500+ 0.8(Y-T) I= 500-10r - M P 1. = = 0.1Y - 35r Where C is planned consumption, / is planned investment spending, T is government tax revenues, G is government purchases, M is the money supply, P is the price level and r is the interest rate. 2. G = 800 T = 200 M = 1000 P = 2 b) Calculate the equilibrium value of output Y and interest rate r (round off your answers to one decimal point). Compute also the level of consumption and investment spending in equilibrium and check whether the actual level of spending matches the equilibrium level of output. c) Due to some negative news concerning the impact of global warming on the economy, consumers are becoming more pessimistic about the future to the point of reducing autonomous consumption by 50. What is the immediate impact on income before the economy adjusts to its new equilibrium? What are the economy's equilibrium level of…Consider a closed economy where the goods and money markets are described by the following relationships: C = 500+ 0.8 (Y-T) I = 500 - 10r M P = 0.1Y35r G = 800 T = 200 M = 1000 P = 2 Where C is planned consumption, I is planned investment spending, T is government tax revenues, G is government purchases, M is the money supply, P is the price level and r is the interest rate. a) Derive the two expressions for the IS and LM equilibrium relationships respectively. Sketch a graph of the two relationships. b) Calculate the equilibrium value of output Y and interest rate r (round off your answers to one decimal point). Compute also the level of consumption and investment spending in equilibrium and check whe her the actual level of spending matches the equilibrium level of output. c) Due to some negative news concerning the impact of global warming on the economy, consumers are becoming more pessimistic about the future to the point of reducing autonomous consumption by 50. 2. 1. What is…Consider a closed economy. The introduction of new technology and an increase in the marginal propensity to consume of households will decrease real interest rates and the equilibrium quantity of saving supplied and demanded in this economy. Answer true or false. Please briefly explain your answer.
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