Suppose the current money supply (M) is 4.8 billion U.S. dollars, the nominal gross domestic product (GDP) is 72 billion U.S. dollars, and the actual gross domestic product (Y) is 12 billion U.S. dollars. Calculate the price level (P) and the velocity of money (V) separately. Show your steps.

Q: How does commodity money differ from fiat money? Discuss with an example of each.

A: Fiat Money refers to the currency which is a legal or declared legal tender by the government. This…

Q: Using the equation of velocity of money, you need to give an example of a "transaction" and…

A: Below is the formula to find the velocity of money:Velocity of Money=P×YMM=Money…

Q: Money demand curve is downward sloping because as interest rate rises, businesses find it less…

A: The curve that depicts the inverse relationship between the rate of interest and the quantity of…

Q: In the mid 1800's, grain sellers in Chicago would deliver their grain to warehouses and receive a…

A: The currency that has been established as money, has no use or intrinsic value and is made legal…

Q: What are the two reasons that people want to hold money? In other words, what are the two types of…

A: In general, individuals prefer to have their cash on hand rather than deposit it in a bank. Cash or…

Q: This month, the Hong Kong government planned to issue up to $2.55 billion in retail green bonds.…

A: The money supply usually refers to the total amount of cash and liquid assets in an economy on a…

Q: Suppose the monetary base doubles and the money multiplier doubles as well.  Consequently, the money…

A: Answer to the question is as follows :

Q: Explain how the GDP and the interest rate are related to the transactions and asset demands for…

A: Demand for money: It means the total amount of money that is wanted to be held by the population of…

Q: According to the quantity theory of money, an excess quantity of money supplied will lead to:…

A: The quantity theory of money dictates: MV=PY M: Money supply V: Velocity of money P: The price level…

Q: Fill in the Value of Money column in the following table. Quantity of Money Demanded Price Level (P)…

A: 1 divided by price level is the value of money. The value of money at each price level is shown in…

Q: How does covid-19 affect the money supply in the Philippines?

A: The pandemic COVID-19 have affected every part of the world with severe damage of human life and…

Q: The economy of Quarterville currently has a level of M1 equal to $49.000. If there are $38,000 worth…

A: Savings deposits = $38000 Moneny market funds = $89000 Time deposits = $32000 M1 = $49000

Q: Explain the different money aggregates and its components.

A: Money supply is the summation of the value of money that circulates in the economy during a period…

Q: Which of these would lead to a decrease in demand for money? A) decrease in the price of goods and…

A: We will solve the first three subparts only. Please resubmit the question with any other parts you'd…

Q: Fiat money is the money without intrinsic value, used as money because of government decree. а. Т b.…

A: Money is an instrument used to make an exchange of products, services, or any other assets. In…

Q: Money is

A: Money helps to overcome the problems of barter system but their is still some imperfections exist.

Q: Which of the following would lead to an increase (rightward shift) in the demand for money? an…

A: The demand for money represents the total amount of money that the people of an economy wants to…

Q: Draw and correctly label a graph of the money market. On your graph demonstrate each of the…

A: Money market is a part of financial market where financial instruments with high liquidity and…

Q: Differentiate between the real flow and money flow

A: Money is the medium of use as a payment after purchasing the products or services.

Q: Explain any two components of money supply flowing in an economy?

A: According to the given question Supply of money basically refers to the circulation of the money…

Q: Commercial banks hold governments bonds of £71, reserves of £61, and currency of £48. The public…

A: Answer to the question is as follows:

Q: If the head of the Central Bank of Brazil wanted to increase the supply of money in Brazil in 2015,…

A: Both the parts have been solved below.

Q: Discuss the effects that COVID-19 may have had on the money multiplier. Give at least two examples…

A: Introduction: The money multiplier factor refers to the amount of cash generated by banks for each…

Q: Explain the impact on current demand for money in the economy under the following conditions based…

A: The money supply refers to all of a country's currency and other liquid assets on the measurement…

Q: Suppose that the public wishes to hold 0.15 of any rise in its deposits as cash, and that banks wish…

A: We have given that public hold 0.15 proportion of deposit as cash and banks holds 0.08 of any rise…

Q: Q.1.The ________ demand for money arises out of the need to hold money as a medium of exchange. This…

A: NOTE:  Money is a medium of exchange, store of value and unit of account.

Q: Which of the following options best defines money? Explain briefly. a) Paper currency or coins that…

A: Money refers to a medium of exchange of goods and services in an economy. It means that any good or…

Q: Please explain the difference between the transaction demand for money and the asset demand for…

A: Transaction demand of money refers to the demand for money that is cash and checking account balance…

Q: Consider the following data for the United States: On October 01, 2020, M1 was $17,609 billion, the…

A: Here we calculate the income velocity of money by using the given information , so the calculation…

Q: Which of the following will cause the demand curve for money to shift to the  right?  (a) An…

A: Money demand is a negatively sloped curve showing inverse relationship between interest rate and…

Q: explain more about the creation of money and the use of digital money in nowadays.

A: *Creation of money Money is used as a medium of exchange. Initially there was barter system in which…

Q: Throughout history, all sorts of interesting things have been used as money, including fresh fish…

A: Answer: Introduction: A system of exchange where things are used as money is called barter exchange.…

Q: What are the three basic functions of money? Describe how rapid inflation can undermine money’s…

A: Money is accepted and generalized form of acceptance in relation to transactions made. The money…

Q: Which one of the following statements is NOT true? (a)     Money is the most liquid asset. (b)…

A: "Since you have asked multiple questions, we will solve first question for you .. If you want any…

Q: Please type the answer by the computer, so I can see it clearly, thank you!!! Assume the Federal…

A: Open-market operations, the reserve requirement, and the discount rate are the Fed's three main…

Q: Explain how each of the following developments would affect the supply of money, the demand for…

A: a)  Reduction in the bank's reserve requirements enables banks to lend more money to the public…

Q: In October 2008, the Federal Reserve began paying interest on the amount of excess reserves held by…

A: If the Federal Reserve paying interest on the amount of excess reserves held by banks, it will…

Q: If the head of the Central Bank of Japan wanted to expand the supply of money in Japan in 2009,…

A: The economy performs according to business cycles. Business cycle indicates that there will be an…

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.