Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 10, Problem 1PA
(a)
To determine
The change in demand for money.
(b)
To determine
The change in velocity of money.
(c)
To determine
The change in output and prices in the long run.
(d)
To determine
The policy of Fed to stabilize price level.
(e)
To determine
The policy of Fed to stabilize output.
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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)
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