the average money balance during the pay period. Concept Introduction: The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Question

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Answer 1

Question

Chapter 15, Problem 1P

Sub-part

A

To determine

the average money balance during the pay period.

Concept Introduction:

The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Sub-part

A

Expert Solution

Explanation of Solution

Since I spend my money at a constant rate during the month, I use the same amount everyday which leaves my average money balance to be $1,00030=$33.33 during the pay period.

Sub-Part

B

To determine

the average monthly balance in each of the circumstances.

Concept Introduction:

The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Sub-Part

B

Expert Solution

Explanation of Solution

I spend at a constant rate, so getting $500 twice monthly instead of $1,000 once, would lower my average money balance to $5,0030=$16.67 .
If I am uncertain about my total spendings, I would keep hold some money and thus, my average money balance would increase as it would be more than zero.
Spending more in the beginning of the month would make reduce the amount of money with me, thus, this reduce the average money balance.
If the income increases from $1,000, it will increase the average money balance.

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Answer

M” method Given the following model, solve by the method of “M”. (see image)

As indicated in the attached image, U.S. earnings for high- and low-skill workers as measured by educational attainment began diverging in the 1980s. The remaining questions in this problem set use the model for the labor market developed in class to walk through potential explanations for this trend. 1. Assume that there are just two types of workers, low- and high-skill. As a result, there are two labor markets: supply and demand for low-skill workers and supply and demand for high-skill workers. Using two carefully drawn labor-market figures, show that an increase in the demand for high skill workers can explain an increase in the relative wage of high-skill workers. 2. Using the same assumptions as in the previous question, use two carefully drawn labor-market figures to show that an increase in the supply of low-skill workers can explain an increase in the relative wage of high-skill workers.

Answer 2

Question

Chapter 15, Problem 1P

Sub-part

A

To determine

the average money balance during the pay period.

Concept Introduction:

The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Sub-part

A

Expert Solution

Explanation of Solution

Since I spend my money at a constant rate during the month, I use the same amount everyday which leaves my average money balance to be $1,00030=$33.33 during the pay period.

Sub-Part

B

To determine

the average monthly balance in each of the circumstances.

Concept Introduction:

The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Sub-Part

B

Expert Solution

Explanation of Solution

I spend at a constant rate, so getting $500 twice monthly instead of $1,000 once, would lower my average money balance to $5,0030=$16.67 .
If I am uncertain about my total spendings, I would keep hold some money and thus, my average money balance would increase as it would be more than zero.
Spending more in the beginning of the month would make reduce the amount of money with me, thus, this reduce the average money balance.
If the income increases from $1,000, it will increase the average money balance.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 15, Problem 1P

Sub-part

A

To determine

the average money balance during the pay period.

Concept Introduction:

The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Sub-part

A

Expert Solution

Explanation of Solution

Since I spend my money at a constant rate during the month, I use the same amount everyday which leaves my average money balance to be $1,00030=$33.33 during the pay period.

Sub-Part

B

To determine

the average monthly balance in each of the circumstances.

Concept Introduction:

The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Sub-Part

B

Expert Solution

Explanation of Solution

I spend at a constant rate, so getting $500 twice monthly instead of $1,000 once, would lower my average money balance to $5,0030=$16.67 .
If I am uncertain about my total spendings, I would keep hold some money and thus, my average money balance would increase as it would be more than zero.
Spending more in the beginning of the month would make reduce the amount of money with me, thus, this reduce the average money balance.
If the income increases from $1,000, it will increase the average money balance.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 15, Problem 1P

Sub-part

A

To determine

the average money balance during the pay period.

Concept Introduction:

The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Sub-part

A

Expert Solution

Explanation of Solution

Since I spend my money at a constant rate during the month, I use the same amount everyday which leaves my average money balance to be $1,00030=$33.33 during the pay period.

Sub-Part

B

To determine

the average monthly balance in each of the circumstances.

Concept Introduction:

The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Sub-Part

B

Expert Solution

Explanation of Solution

I spend at a constant rate, so getting $500 twice monthly instead of $1,000 once, would lower my average money balance to $5,0030=$16.67 .
If I am uncertain about my total spendings, I would keep hold some money and thus, my average money balance would increase as it would be more than zero.
Spending more in the beginning of the month would make reduce the amount of money with me, thus, this reduce the average money balance.
If the income increases from $1,000, it will increase the average money balance.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 15, Problem 1P

Sub-part

A

To determine

the average money balance during the pay period.

Concept Introduction:

The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Sub-part

A

Expert Solution

Explanation of Solution

Since I spend my money at a constant rate during the month, I use the same amount everyday which leaves my average money balance to be $1,00030=$33.33 during the pay period.

Sub-Part

B

To determine

the average monthly balance in each of the circumstances.

Concept Introduction:

The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Sub-Part

B

Expert Solution

Explanation of Solution

I spend at a constant rate, so getting $500 twice monthly instead of $1,000 once, would lower my average money balance to $5,0030=$16.67 .
If I am uncertain about my total spendings, I would keep hold some money and thus, my average money balance would increase as it would be more than zero.
Spending more in the beginning of the month would make reduce the amount of money with me, thus, this reduce the average money balance.
If the income increases from $1,000, it will increase the average money balance.

Answer 6

Chapter 15, Problem 1P

Sub-part

A

To determine

the average money balance during the pay period.

Concept Introduction:

The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Sub-part

A

Expert Solution

Explanation of Solution

Since I spend my money at a constant rate during the month, I use the same amount everyday which leaves my average money balance to be $1,00030=$33.33 during the pay period.

Answer 7

Chapter 15, Problem 1P

Sub-part

A

To determine

the average money balance during the pay period.

Concept Introduction:

The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Answer 8

Sub-part

A

Expert Solution

Explanation of Solution

Since I spend my money at a constant rate during the month, I use the same amount everyday which leaves my average money balance to be $1,00030=$33.33 during the pay period.

Answer 9

Sub-part

A

Expert Solution

Answer 10

Sub-part

A

Expert Solution

Answer 11

Expert Solution

Answer 12

Sub-Part

B

To determine

the average monthly balance in each of the circumstances.

Concept Introduction:

The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Sub-Part

B

Expert Solution

Explanation of Solution

I spend at a constant rate, so getting $500 twice monthly instead of $1,000 once, would lower my average money balance to $5,0030=$16.67 .
If I am uncertain about my total spendings, I would keep hold some money and thus, my average money balance would increase as it would be more than zero.
Spending more in the beginning of the month would make reduce the amount of money with me, thus, this reduce the average money balance.
If the income increases from $1,000, it will increase the average money balance.

Answer 13

Sub-Part

B

To determine

the average monthly balance in each of the circumstances.

Concept Introduction:

The velocity of money is affected by many financial innovations of exchanging money. The frequency of wages is also an important factor that determines the velocity of money. Since payment practices change slowly over time, their effects on velocity can be anticipated. The more often workers get paid, keeping things constant, the lower their average money balances, so the more active the money supply and the greater its velocity. Thus, to increase the average money balance, the wages should not be paid very frequently but at long regular intervals which enables the worker to plan their spending.

Answer 14

Sub-Part

B

Expert Solution

Explanation of Solution

I spend at a constant rate, so getting $500 twice monthly instead of $1,000 once, would lower my average money balance to $5,0030=$16.67 .
If I am uncertain about my total spendings, I would keep hold some money and thus, my average money balance would increase as it would be more than zero.
Spending more in the beginning of the month would make reduce the amount of money with me, thus, this reduce the average money balance.
If the income increases from $1,000, it will increase the average money balance.