Keynes hypothesized that the speculative component of money demand was primarily determined by the level of Oa. interest rates. Ob. stock market prices. c. income. Od. velocity of money.
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Keynes hypothesized that the speculative component of money
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- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
- Answer completely.
- You will get up vote for sure.
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- In the full SR model, IS-LM, we know that if to falls, cet. par., then the real Money Supply will increase. True, False, Uncertain? Explain. Show graphs in i-Y space and i-M/P spaces.Which of the following is not a motive for holding money in Keynes's liquidity preference theory? A. The inflation expectations motive. B. The precautionary motive. C. The speculative motive. D. The transactions motive.Chapter 14, Problem 5, p. 530. (not answered) In the New Keynesian model, how should the central bank change its target interest rate in response to each of the following shocks? Use diagrams and explain your results. (a) There is a shift in money demand. (b) Total factor productivity is expected to decrease in the future. (c) Total factor productivity decreases in the present Chapter 14, Problem 6, p. 530. (not answered) In the New Keynesian model, suppose that in the short run the central bank cannot observe aggregate output or the shocks that hit the economy. However, the central bank would like to come as close as possible to economic efficiency. That is, ideally the central bank would like the output gap to be zero. Suppose initially that the economy is in equilibrium with a zero-output gap. (a) Suppose that there is a shift in money demand. That is, the quantity of money demanded increases for each interest rate and level of real income. How well does the central bank perform…
- The economy has been given by the following IS-LM curves. What are the consequences of an expansionary monetary policy(for instance, an increase in G) in the short run and in the long run? The FOMC started to taper and nominal interest rate moves lower. What is the rational for that? Please also add the AD-AS analysis to your argument, if necessaryIn the Keynesian theory, money wages do not fall in response to a decrease in aggregate deman True FalseIn the Neoclassical-Keynesian Synthesis ASAD model, let us suppose that the interest rate has no effect on real money demand. What does this imply for (1) the slope of the IS curve, for (2) the slope of LM curve, and for (3) the slope of the AD curve? (1) The slope of the IS curve – (2) The slope of the LM curve – (3) The slope of the AD curve –
- Consider the following aggregate demand and supply relations and the monetary policy rule. yt= β0 + β1(mt -pt) + ωt (AD) yt= yn + α (pt -Et-1pt) + νt (AS) mt= μ0 + μ1mt-1 + et (MP) The random term for AD has the moving average form ωt =ξt+ρξt-1, where ξt, et, andνt are white noise terms. Derive a solution for ptand yt.Interpret your solution for pt, using directly your solution for it and your expectations regarding the signs of the AD, AS and MP parameters.Compare Keynes Liquidity Preference Theory with the classical quantity theory of money. Explain measurement of money and money creation in Pakistan.Please only answer part D (I already have part a, b, and c) In the New Keynesian model, suppose that in the short run the central bank cannot observe aggregate output or the shocks that hit the economy. However, the central bank would like to come as close as possible to economic efficiency. That is, ideally the central bank would like the output gap to be zero. Suppose initially that the economy is in equilibrium with a zero-output gap. (a) Suppose that there is a shift in money demand. That is, the quantity of money demanded increases for each interest rate and level of real income. How well does the central bank perform in relative to its goal? Explain using diagrams. (b) Suppose that firms expect total factor productivity to increase in the future. Repeat part (a). (c) Suppose that total factor productivity increases in the current period. Repeat part (a). (d) Explain any differences in your results in parts (a)–(c) and explain what this implies about the wisdom of following an…
- The main argument against monetary policy is that it affects only nominal variables, not real variables. Explain this argument using the method below. I. Explain and show on a graph the short-run and long-run equilibrium changes in the AD/AS model from expansionary monetary policy. How does this support an anti-monetary policy stance? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.The Central Bank is considering two alternative monetary policies: holding the money supply constant adjusting the money supply to hold the interest rate constant. In the IS-LM model, which policy is better to stabilize output if: all shocks to the economy arise from external changes in the demand for goods and services? all chocks to the economy arise from external changes in the demand for money?With aid of well labeled diagrams, explain how under the classical model a decrease in the money supply, an increase in income velocity and a fall in the transaction demand for money would affect prices, money wages and real variables