Determine the equilibrium level of income and interest rate given the following information about the commodity market: C= 0.8Y+380 I=-30r + 136 and the following information about the money market: Ms= 350, L1= 0.2Y, L2 -20r + 84
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- Explain if this statement is true or false and provide equations whenever possible. Specialization in the financial markets has limited positive effects on the supply of money in circulationAfter staying virtually flat for about a year and a half, the average lending rate of banks has started to show signs of decline in April after the Bank of Ghana reduced the monetary policy rate the month before. The Summary of Economic and Financial Data (May 2020) published by the Bank of Ghana has shown that average lending rate has finally moved out of its comfort zone to a step downward. Prior to recording 22.38 percent in April, the average lending rate has since the past 17 months (December 2018) not come below 23%.How would banks benefit when interest rates decrease?When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________. the quantity demanded of financial capital at any given interest rate will remain unchanged. the quantity demanded of financial capital at any given interest rate will shift to the left. the quantity demanded of financial capital at any given interest rate will shift to the right. the quantity demanded of financial capital at any given interest rate will achieve equilibrium.
- When consumers and businesses have greater confidence that they will be able to repay loans in the future: Group of answer choices The quantity supplied of financial capital at any given interest rate will shift to the right The quantity demanded of financial capital at any given interest rate will shift to the right The quantity demanded of financial capital at any given interest rate will shift to the left The quantity supplied of financial capital at any given interest rate will shift to the leftWhen nominal interest rates on financial assets are low, the opportunity cost of holding money is ________, so the quantity of money demanded by households and firms will be ________.Answer the given question with a proper explanation and step-by-step solution. Why is equilibrium, in the asset market described by the condition that real money supply equals real money demanded? What is the aggregation assumption that is needed to allow ignoring the markets for other assets?
- Markets are ignoring this guidance, with the start of the interest rate hiking cycle starting to be priced into the later part of 2022, just 12 months from now, and around two years before the RBA reckons it will need to move. Recall the current official cash rate is 0.1 per cent. The market is pricing in a 0.5 per cent cash rate by the middle of 2023, 1.0 per cent by the end of 2023 and with further increases through 2024.” Use the dynamic aggregate demand and aggregate supply model to explain the type and how to implement monetary policy and the effects of the monetary policy of the Reserve Bank of Australia according to the statement mentioned above.An economy has a constant population. Everyone’s demand for chequing deposits is5,000 goods in total in every period. The economy has a total endowment of 10,000goods per period. There is a total stock of unintermediated capital of 1,000 goods in each period. Bank deposits are the only form of money in the economy. Deposits of banks are subject to a 20 percent reserve requirement. The net real rate of return on capital is 10 percent per period. After meeting the reserve requirement, banks invest the remainder of all deposits into capital. Individuals do not hold capital. The fiat money stock is$2,000 per period. Capital takes two periods to generate final returns What is this economy’s real GDP? (A)16,050. (B)14,840. (C)11,560. (D)10,000 Can you show your workProvide one argument in favour and one argument against the following statement: “Ideally, it would be optimal to set the nominal interest rate to zero at all times.”
- log(MDMD / P) = α + (β x i) + [γ x log(Y)] + ε The following table gives estimated coefficients for the equation you identified in the previous question: Coefficient Value α 0.10 β –0.15 γ 0.5 If the nominal interest rate rises by 4 percentage points and income rises by 2 percentage points, then ignoring the error term, the quantity of real money demanded changes by ( 10%/-15%/12%/16%) . Based on the table, the elasticity of the real money demanded with respect to income is .........The weighted average TT/US dollar selling rate depreciated marginally by 0.05 percent to US$1 = TT$6.7838 in August 2021 from US$1 = TT$6.7802 in October 2020.” Create a supply and demand graph with the above information.PLEASE ANSWER ALL MULTIPLE CHOICE QUESTIONS (1-4) 1. Which of the following is FALSE in regards to an overnight target rate of 3.25%? a) The Bank of Canada will pay 3% interest on Chartered Banks' deposits with the Bank of Canada. b) The Bank of Canada will charge 3.5% on loans taken by the Chartered Banks from the Bank of Canada. c) The unemployment rate MUST be equal to the overnight target rate. Hence the unemployment rate is ALSO EQUAL to 3.5%. d) The overnight target rate is the interest rate that Chartered Banks will use when borrowing and lending money to each other. e) There are NO FALSE statements. All solutions provided are correct. 2. If there is an expected increase in Canada's overnight rate, what should we expect to occur? a) The Canadian dollar will be more valuable relative to other currencies. The Canadian dollar sees an increase in demand by foreigners seeking Canadian bonds and interest bearing investments. b) Canadian exports will rise. c) The stock market will…
