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- Suppose that a change in government regulations allows banks to start paying interest on checkingaccounts.a. How does this change affect the demand for money? b. What happens to the velocity of money?c. If the Fed keeps the money supply constant, what will happen to output and prices in the shortrun and in the long run? (Please draw the relevant graph)Describe the difference betweenan exogenous and an endogenous theory about the money supply.In your view what importantdifferences between the twotheories exist?The quantity theory of money: What is the key endogenous variable in the quan-tity theory? Explain the efect on this key variable of the following changes: (a) Te money supply is doubled.(b) Te velocity of money increases by 10%.(c) Real GDP rises by 2%.(d) Te money supply increases by 3% while real GDP rises by 3% at thesame time
- Wouldn't the answer for this one be an increase in price level since we have an increased demand for money? I'm only given one attempt at this; please help asap.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 decreasesBy 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.
- 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%?A. Discuss, with the help of diagrams, Friedman’s argument concerning the short and long-run effects of an increase in the money supply. B. Now discuss how his argument can be extended to study short and long-run effects of changes in the growth rate of a growing money supply. Both parts please.When the Federal Reserve increases the money supply, people spend more because they now have more money. O True O False
- 1. Let’s consider a hypothetical economy where this year’s money supply is Tk.400, nominal GDP is Tk. 20000 and real GDP is Tk. 5000. a) Define quantity theory of money. b) Calculate the price level.c) Calculate the velocity of money.d) Suppose the central bank changes the money supply so that the new money supply is Tk. 200, calculate the new price level.e) Show stages b and d on a graph. #note: must needed e number ansIn economics term, define what money isNeed help with economic questions asap 1. Using a supply and demand diagram for each of the following scenarios, show how the market for money is affected in the long run. Explain your answer. (a) Everyone subscribes to r/WallStreetSilver, and starts investing in silver and gold. (b) Commercial banks raise their mortgage rates, even though the Bank of Canada retains a low Bank Rate. (c) The Bank of Canada prints money and mails $1,000 to every Canadian.