The demand for money in an economy is high when the Oa. interest rate is high. Ob. price level is high. Oc. real GDP is low. Od. unemployment rate is high. Oe. personal tax rate is low.
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- 10 - Which of the following depends on the demand for money, which we say just in case and for this purpose?A) IncomeB) to KeynesC) to the economyD) to interestE) Investment. Let real GDP growth-2.4% per year, money growth-5% per year, nominal interest rate 4.8% and velocity of money-constant. (a) Find the inflation rate, the real interest rate, and the cost of holding money.125.) If the price level, P, is 16, money demand equal to money supply is $1,000, and the desired cash balance ratio, little k, is .25, what is real GDP? 4000 2000 250 15.625
- ASAPPPP The demand for money is given by Md = $Y (0.3 - i), where $Y = 100 and the supply of money is $20. a. What is the equilibrium interest rate? b. What is the impact on the interest rate if central bank money is increased to $25?2. Answer the following questions. 2.1 One good: barley. The economy has enough labor, capital, and land to produce Y = 800 bushels of barley. V is constant. In 2020, money supply (MS) = $2,000 P = $10/bushel. For 2021, the central bank increases MS by 10%. According to the quantity equation, compute the 2021 values of nominal GDP and P. Compute the inflation rate for 2020–2021. 2.2 If you deposit money in the bank for one year. Scenario 1: nominal interest rate = 10%, inflation rate = 0% Scenario 2: nominal interest rate = 25%, inflation rate = 15% In which scenario does the real value of your deposit grow the most? Explain. 2.3 Inflation distorts relative prices. What does this mean and why does it impose a cost on society?All else equal, suppose the interest rate rise from 3% to 3.5%. What will happen in the supply of money? a. Shifts to the right. b. Shifts to the left. c. An upward movement along the supply curve. d. An downward movement along the supply curve. e. The supply will remain unchanged.
- 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"Transactions demand for money depends on income and intrest rate." Explain (please use the graphs if needed and explain the question very long)Japan's money supply is growing rapidly at a 5.54% while real GDP is increasing at 8.29%. Japan's real interest rate is also growing at 4.46%. *we are assuming Quantity Theory of Money, Classical Dihotomy, and Fisher Effect effect are true. a. calculate the inflation rate b. calculate nominal interest rate c. calculate GDP growth rate
- The demand for money is given by Md = $Y (0.3 - i), where $Y = 100 and the supply of money is $20. What is the equilibrium interest rate? What is the impact on the interest rate if central bank money is increased to $25?Desired consumption is Cd = 100 + 0.8Y - 500r - 0.5G, and desired investment isId = 100 - 500r. Real money demand is Md/P = Y - 2000i. Other variables are πe = 0.05, G = 200, = 1000, and M = 2100.a. Find the equilibrium values of the real interest rate, consumption, investment, and the price level. b. Suppose the money supply increases to 2800. Find the equilibrium values of the real interest rate, consumption, investment, and the price level. (Assume that the expected inflation rate is unchangedAssume GDP is currently $12,800 billion per year and the quantity of money is $512 billion. What is the velocity of money? (4) The nation collectively holds enough money to finance how many days, worth of GDP expenditure? (4)
