The equilibrium interest rate is determined at the intersection of the aggregate demand and aggregate supply curve. to fluctuate over time. 0000 by the Fed. at the intersection of the total demand for money curve and the supply of money curve.
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- The graph shows the demand for money curve and the supply of money curve. The Fed decreases the quantity of real money supplied to $3.9 trillion. Draw a new MS curve that shows the effect of the Fed's action. Label it. Draw a point at the new equilibrium quantity of money and interest rate. Before the Fed decreases the quantity of money, the equilibrium interest rate is percent a year. After the Fed decreases the quantity of money, at an interest rate of 4 percent a year, people want to hold money than the quantity supplied, so they bonds. A. more; sell B. less; buy C. less; sell D. more; buy The price of a bond A. falls; falls O B. rises; falls and the interest rate 8- 7- 6- 5- 4- 3- 2- 1- Nominal interest rate (percent per year) 4 0+ 3.8 MS 4.0 MD 4.0 4.1 3.9 Quantity of money (trillions of 2009 dollars) >>> Draw only the objects specified in the questi 4.2What is the tradeoff that the Fed faces in the short run? In the short run, the Fed faces a tradeoff between ________. A. the nominal interest rate and the real interest rate B. monetary aggregates and credit aggregates C. short-term interest rates and long-term interest rates D. inflation and unemploymentWhat is the effect of a rise in the U.S. price level on the buying power of money? The buying power of money _______. A. increases and aggregate demand increases B. increases and the quantity of real GDP demanded increases C. decreases and the quantity of real GDP demanded decreases D. decreases and aggregate demand decreases
- Only typed answer and please don't use chatgpt _________________will cause the money demand curve to shift to the left and the nominal interest rate to decrease. a. A decrease in price b. An increase in money supply c. A decrease in money supply d. An increase in priceVALUE OF MONEY 0.45 10000 MSA MS 13000 QUANTITY OF MONEY MD Suppose the money supply shifts from MS2 to MS1. Which of the following events could explain the shift? ○ a. The Fed buys government bonds Ob. The price level has increased Oc. The value of money has decreased. C. Od. The Fed conducts and open market sale of government bondsThe graph shows the demand for money curve and the supply of money curve. The quantity of money decreases to $1.0 trillion. Draw a new MS curve that shows the effect of the Fed's action. Label it Draw a point at the new equilibrium quantity of money and interest rate 12- 11- 10- 9 A 7 Nominal interest rate (percent per year) $ MS MO 1.1 19 10 KE Quantity of money drilions of dollars) Draw only the objects specified in the question 12
- What is the expected impact of a decline in the money supply to the US economy? A. Higher aggregate prices (inflation) B. Lower aggregate prices (deflation) C. There is no general relationship between the money supply and inflatonIf the central bank wa nts to expand aggregate demand, it ca n ___ the money supply, whichwould the interest rate.a. increase, increaseb. increase, decreasec. decrease, increased. decrease, decreaseThe Fed’s target for the federal funds ratea. is an extra policy tool for the central bank, inaddition to and independent of the money supply.b. commits the Fed to set a particular money supplyso that it hits the announced target.c. is a goal that is rarely achieved because the Fedcan determine only the money supply.d. matters to banks that borrow and lend federalfunds but does not influence aggregate demand.
- What happens to the aggregate demand curve when the Fed reduces the money supply? a. It shifts leftward, raising real GDP and the price level b. It shifts leftward, lowering real GDP and the price level c. It shifts rightward, raising real GDP and the price levelExplain the impact of an increase in money supply in the short run and in the long run. Include a graph.Money market equilibrium depends on what the central bank targets. How does the money market adjust to the equilibrium? If the central bank targets _______. A. the short-term interest rate, the quantity of money demanded adjusts B. the quantity of money demanded, the short-term interest rate adjusts C. the monetary base, the quantity of money supplied adjusts D. the quantity of money, the short-term interest rate adjusts