The money market in the country of Everton is depicted in the graphs below tall figures are in billions of dollars) a) Suppose that the central bank of Everton wishes to implement a contractionary monetary policy and decreases the money supply by $50 billion, Draw the new money supply curve in the graph below. Plot only the endpoints of MS2 line in the graph below. 10) Interest rate () Interest rate() NO 19 150 Quantity of money The investment demand curve is shown in the following graph. O MS NOOD NISAD 200 2150 300 50 Tools 100 150 200 250 Quantity of investment b) What is the new equilibrium interest rate in Everton? -% By how much will investment spending in Everton change as a result of the decrease in the money sunnly?
The money market in the country of Everton is depicted in the graphs below tall figures are in billions of dollars) a) Suppose that the central bank of Everton wishes to implement a contractionary monetary policy and decreases the money supply by $50 billion, Draw the new money supply curve in the graph below. Plot only the endpoints of MS2 line in the graph below. 10) Interest rate () Interest rate() NO 19 150 Quantity of money The investment demand curve is shown in the following graph. O MS NOOD NISAD 200 2150 300 50 Tools 100 150 200 250 Quantity of investment b) What is the new equilibrium interest rate in Everton? -% By how much will investment spending in Everton change as a result of the decrease in the money sunnly?
Chapter1: Making Economics Decisions
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The money market in the country of Everton is depicted in the graphs below tall figures are in billions of dollars)
ay Suppose that the central bank of Everton wishes to implement al contractionary monetary policy and decreases the money supply
by $50 billion, Draw the new money supply curve in the graph below. Plot only the endpoints of MS2 line in the graph below.
10)
Interest rate ()
Interest rate (3)
NO
KO
19
M
NOD
Quantity of money
The investment demand curve is shown in the following graph.
50
IN SAD
200 2150 300
100 150
Quantity of investment
200 2:50
Tools
b) What is the new equilibrium interest rate in Everton?
%
By how much will investment spending in Everton change as a result of the decrease in the money sunnly?
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I
0

Transcribed Image Text:redictions: On
b) What is the new equilibrium interest rate in Everton?
%
c) By how much will investment spending in Everton change as a result of the decrease in the money supply?
50 billion
Decrease
of $
d) Suppose that for every $1 change in investment spending, aggregate demand changes by $4. Draw the new AD curve. Plot only th
endpoints of the AD2 curve in the graph below.
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