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When the Federal Reserve increases the money supply, people spend more because they now have more money. O True O False
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- Economics To increase the money supply, what could the Federal Reserve do? Choose one or more: OA. make an open market sale OB. decrease the discount rate O Cincrease income taxes OD. increase the discount rate O E. make an open market purchaseIs it possible that money supply can be more than the money demand (this means that we can have too much money)?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 decreases
- Suppose there is an increase in money supply, as a result interest rates will Multiple Choice rise and the quantity of money will increases. fall and the quantity of money will remain constant. rise and the quantity of money will decrease. fall and the quantity of money will increases.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%?What is the amount of excess supply of or excess demand for money?C. Show in graph that at this interest rate (10%) there is disequilibrium in themoney market.2. Assume that a particular bank has excess reserves of Php800,000 and checkabledeposits of Php1,500,000. If the reserve ratio is 20%, what is the size of the bank’sactual reserves?3. Suppose that GRAB Bank is a newly created bank in your hometown. Consider thefollowing transactions: Owners of the bank sold shares of stocks to the public (which includes owners’equity) amounting to P1,000,000. To fully…Suppose that changes in the bank regulations expand the availability of credit cards so that people need to hold less cash. (i) Explain how does that affect the demand for money? (ii) If the Central Bank does not respond to this event, explain what will happen to the price?
- Suppose that when everyone wakes up tomorrow, they discover that thegovernment has given them an additional amount of money equal to the amountthey already had. Explain what effect this doubling of the money supply willlikely have on the following:a. The total amount spent on goods and servicesb. The quantity of goods and services purchased if prices are stickyc. The prices of goods and services if prices can adjust?Need 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.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%?
- Suppose that the Federal Reserve has set a reserve requirement of 10 percent and that banks will not hold any excess reserves. a) If the Federal Reserve conducts open market operations and sells $1 million worth of government bonds to the public, by how much will the money supply decrease? b) Now suppose the Federal Reserve lowers the reserve requirement to 5 percent, but all banks choose to hold an additional 5 percent of deposits as excess reserves. How will this change affect the money supply? Explain.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.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
