How does an increase in price level affect the money market? a. Money demand increases b. Money supply decreases c. Money demand decreases d. Money supply increases
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How does an increase in price level affect the
a. Money
b. Money supply decreases
c. Money demand decreases
d. Money supply increases
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- When the money market is depicted in a diagram with the value of money on the vertical axis, which statement best describes the long-run effects of an increase in money supply? a)The price level decreases, but the quantity of money demanded increases b)The price level and the quantity of money demanded increases c)The price level and the quantity of money demanded decreases d)The price level increases, but the quantity of money demanded decreasesWhen the Federal Reserve increases the money supply, people spend more because they now have more money. O True O FalseSuppose that the economy has the following money supply and demand equations: Money Supply: M = 8000Money Demand: M= 10,000 – 40,000rwhere money is in billions of dollars and interest rates, r , is written as a decimal(e.g., an interest rate of 10% would be written as .1 in the equation).A. Determine the equilibrium interest rate and quantity of money.B. What will happen in the money market if the interest rate is currently 10%?
- Show and explain the effects of an increase in Price level in money marketA decrease in the interest rate, other things beingequal, causes a (an)a. upward movement along the demand curvefor money.b. downward movement along the demandcurve for money.c. rightward shift of the demand curve for money.d. leftward shift of the demand curve for money.The interest rate falls if a. the price level falls or the money supply rises. b. the price level rises or the money supply falls. c. the price level falls or the money supply falls. d. the price level rises or the money supply rises.
- Suppose that changes in the bank regulations expand the availability of credit cards so that people need to hold less cash. (i) Explain how does that affect the demand for money? (ii) If the Central Bank does not respond to this event, explain what will happen to the price?Equilibrium in the money market occurs when Select one: a. the transactions demand for money equals the precautionary demand for money. b. the quantity of money demanded is more than the quantity of money supplied in the economy. c. the quantity of money demanded equals the quantity of money supplied in the economy. d. the quantity of money demanded is less than the quantity of money supplied in the economy.estion list uestion 11 question 12 uestion 13 estion 14 estion 15 estion 16 K Suppose the Bank of Canada increases the quantity of money. Complete the sentences. market determines the real interest rate. adjusts to make the quantity of real money supplied equal to the quantity demanded. In the long run, supply and demand in the The money; inflation rate loanable funds; nominal interest rate O A. OB. OC. loanable funds; price level O D. money; bond price usic V makes aun | Aujla RE- sew Mus RAC HA A C
- Which of the following statements is true of the money supply? a) Increasing the money supply is a way of warding off an economic downturn. b) Decreasing the money supply is a way of warding off an economic downturn. c) The money supply is increased by lowering spending. d) The money supply is increased by raising taxes.Suppose that the economy has the following money supply and demand equations: Money Supply: M = 8000Money Demand: M= 10,000 – 40,000rwhere money is in billions of dollars and interest rates, r , is written as a decimal(e.g., an interest rate of 10% would be written as .1 in the equation).A. Determine the equilibrium interest rate and quantity of money.B. What will happen in the money market if the interest rate is currently 10%?What is the amount of excess supply of or excess demand for money?C. Show in graph that at this interest rate (10%) there is disequilibrium in themoney market.2. Assume that a particular bank has excess reserves of Php800,000 and checkabledeposits of Php1,500,000. If the reserve ratio is 20%, what is the size of the bank’sactual reserves?3. Suppose that GRAB Bank is a newly created bank in your hometown. Consider thefollowing transactions: Owners of the bank sold shares of stocks to the public (which includes owners’equity) amounting to P1,000,000. To fully…By using graphs, show and explain how an increase in money supply can affect the goods market by taking the link between two markets into account.
