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- 1. Name & explain the three advantages of a monetary economy.3. There is a group of economists who argue that the US should return to what’s called a “gold standard”. According to this policy approach, the dollar price of gold is always kept the same, so that we can think of the prices of goods and services as really being denominated in ounces of gold. In this problem, you’ll do a simple calculation that suggests possible problems with this approach. a. Using FRED, calculate how much the dollar price of an ounce of gold rose (in percentage terms) from December 2007 to December 2010. b. Using FRED, calculate how much the Consumer Price Index (CPI) rose (in percentage terms) from December 2007 to December 2010. c. How did the price of the CPI bundle of US goods and services, expressed in terms of ounces of gold, rise or fall (in percentage terms) from December 2007 to December 2010? d. Suppose that the US had been on the gold standard from December 2007 to December 2010, so that prices of goods and services were denominated in terms of ounces of…A. What question was Leon Walras trying to answer via his model of general equilibrium? Discuss. B. Outline the basic version of his model, i.e. an exchange economy with 3 goods and many traders without a money market. Make sure that you discuss all the logical steps needed to complete the model, starting with the properties of demand functions and ending with the role of Walras’ Law. C. Why is your model unable to provide a solution for nominal prices?Explain All part please.
- 3) Calculate the change in net barter terms of trade for country B given that the price of exports has increased 25%, export volume grew 10% and the price of imports increased 30%. Is country B better or worse off?1. Discuss the importance of real GDP to an economy? 2. The problem of double coincidence of want was a huge standing block that subdued the smooth process of the barter economy. Money was introduced to solve this problem. Discuss how money was used to resolve the problem of double coincidence of want and any other problem that affected the smooth running of the barter economy ?Depict two currency markets: the U.S. dollar and the Japanese Yen, setting up the two markets in initial equilibrium. Next to each supply curve and demand curve state who is on the supply curve in the market and who is on the demand curve in the market. Assume there is an increased preference among U.S. consumers for Japanese electronic goods because of a perceived superior quality. 1b. Make changes to the two currency markets reflecting this change. 1c. State which currency has appreciated with respect to the other currency.
- 3. Assuming equilibrium for gold is one hundred times the price of silver, $Au = 100$Ag, which of the following describes an action by an arbitrageur (arb)? a. when Au and Ag prices increase 10%, arb buys gold b. when Au and Ag prices decrease 10%, arb buys gold c. when $Au > 100$Ag, arb buys gold d. when $Au > $100Ag, arb sells gold3. Toyota manufactures most of the vehicles it sells in the United Kingdom in Japan. The baseplatform for the Toyota Tundra truck line is X1,650,000. The spot rate of the Japanese yen againstthe British pound has recently moved from X197/E to X190/E. How does this change the price of theTundra to Toyota's British subsidiary in British pounds?Describe some buyers and some sellers in the market for U.S. dollars.
- 2) Suppose that the monetary policymaker to control the inflation level in thecountry decreased the level of money supply in the country. How that changewill generate impacts on the money market, bond market and foreign exchange market in the short and in the long run? (Use graphs) (10 points)9 In the underwater city of Atlantis, clamshells are seen as a valid form of money. If a person from Atlantis were to magically appear in America and attempt to use their clamshells to a make a purchase, would they be able to? Why or why not? ECONOMIC QUESTION30 - The demand for money, which we say just in case, depends on which of the following?A) For transaction purposesB) InvestmentC) to speculateD) IncomeE) to interest
