1. Debit cards allow an individual to transfer funds directly in a checkable account to a merchant without writing a check. How is this different from the way credit cards work? Are either credit cards or debit cards money? Explain.2. How would each of the following affect the demand for money?a tax on bonds held by individualsa forecast by the Central bank that interest rates will rise sharply in the next quarter 3. Trace the impact of a sale of government bonds by the Central bank on bond prices, interest rates, investment, aggregate demand, real GDP, and the price level.4. The text notes that a 10% increase in the money supply may not increase the price level by 10% in the short run. Explain why.5. Suppose the Central bank were required to conduct monetary policy so as to hold the unemployment rate below 4%. What implications would this have for the economy?

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Asked Nov 24, 2019
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1. Debit cards allow an individual to transfer funds directly in a checkable account to a merchant without writing a check. How is this different from the way credit cards work? Are either credit cards or debit cards money? Explain.

2. How would each of the following affect the demand for money?

  1. a tax on bonds held by individuals
  2. a forecast by the Central bank that interest rates will rise sharply in the next quarter

 

3. Trace the impact of a sale of government bonds by the Central bank on bond prices, interest rates, investment, aggregate demand, real GDP, and the price level.

4. The text notes that a 10% increase in the money supply may not increase the price level by 10% in the short run. Explain why.

5. Suppose the Central bank were required to conduct monetary policy so as to hold the unemployment rate below 4%. What implications would this have for the economy?

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Expert Answer

Step 1

Hi there! As per the honor code, we have the authority to solve only one question at a time.

Money is anything that is generally accepted as a medium of exchange.

Yes, debit cards allow an individual to transfer funds directly in a checkable account to a merchant without writing a check.

Step 2

Credit cards and debit cards are different from each other as at the time of making payments it is not needed for credit cards to have balance but in the case of debit cards, it is necessary to balance in the ...

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