The following graph shows an increase in the demand for money from 2013 (MD2013) to 2014 (MD2014) caused by an increase in the price level. 5.25% 5.50% The initial equilibrium interest rate in 2013 was 5.75% 6.00% 6.25% Now suppose the Bank of Canada chooses not to alter the money supply between 2013 and 2014. On the following graph, use the grey point (star symbol) to illustrate the equilibrium interest rate and quantity of money that would result from this lack of intervention. NOMINAL INTEREST RATE (Percent) 6.50 6.25 6.00 5.75 5.50 5.25 5.00 4.75 4.50 Money Supply 0.9 1.1 1.0 1.2 1.3 1.4 QUANTITY OF MONEY (Trillions of dollars) 1.5 MD 2014 MD 2013 No Intervention New MS Curve + With Intervention Suppose the Bank of Canada wants to keep 2014 interest rates at their 2013 level. (?)
The following graph shows an increase in the demand for money from 2013 (MD2013) to 2014 (MD2014) caused by an increase in the price level. 5.25% 5.50% The initial equilibrium interest rate in 2013 was 5.75% 6.00% 6.25% Now suppose the Bank of Canada chooses not to alter the money supply between 2013 and 2014. On the following graph, use the grey point (star symbol) to illustrate the equilibrium interest rate and quantity of money that would result from this lack of intervention. NOMINAL INTEREST RATE (Percent) 6.50 6.25 6.00 5.75 5.50 5.25 5.00 4.75 4.50 Money Supply 0.9 1.1 1.0 1.2 1.3 1.4 QUANTITY OF MONEY (Trillions of dollars) 1.5 MD 2014 MD 2013 No Intervention New MS Curve + With Intervention Suppose the Bank of Canada wants to keep 2014 interest rates at their 2013 level. (?)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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please also do the graphs thankyouuuu
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