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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Suppose that changes in bank regulations expand the availability of credit cards so that people need to hold less cash.

a. How does this event affect the demand for money?

b. If the Fed does not respond to this event, what will happen to the price level?

c. If the Fed wants to keep the price level stable, what should it do?

Subpart (a):

To determine

Value of money and price level.

Explanation

If people need to hold less cash, then there will be less money demande...

Subpart (b):

To determine

Value of money and price level.

Subpart (c):

To determine

Value of money and price level.

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