EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 32, Problem 5DQ
To determine
The backing of money supply and the value of money.
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4-2 Module Four Homework
LO
5
166
PIE
To use money growth as a short-term monetary policy instrument, a central bank must belleve that
Multiple Choice
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there is a stable link between the monetary base and the rate of inflation
only money matters
there is an unpredictable relationship between money aggregates and inflation
the deposit expansion multiplier is volatile and unpredictable
2. Suppose that the money market can be depicted in the graph below.
Interest rate
(M/P)²
(M³/P)⁰ (M³/P)1
H
A
K
O
B
C
O
E
L3
L1
L2
Quantity of Money
LI is the original demand for money by the public and (M/P) is the real money supply. Assume tha
the price level does not change. The original equilibrium is at point O.
Suppose that the government lowered income taxes so that consumers had more disposable income.
Briefly describe how you reached that conclusion.
Identify the new equilibrium point and what happens to interest rates
If the money supply is $60 billion, the velocity of money is 7, and real GDP is $240 billion, then the
price level equals:
1.75
O 0.57
1.50.
O 4
O 1.25
Chapter 32 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
Ch. 32 - Prob. 1DQCh. 32 - Prob. 2DQCh. 32 - Prob. 3DQCh. 32 - Prob. 4DQCh. 32 - Prob. 5DQCh. 32 - Prob. 6DQCh. 32 - Prob. 7DQCh. 32 - Prob. 8DQCh. 32 - Prob. 9DQCh. 32 - Prob. 10DQ
Ch. 32 - Prob. 11DQCh. 32 - Prob. 12DQCh. 32 - Prob. 13DQCh. 32 - Prob. 14DQCh. 32 - The three functions of money are: LO34.1 a....Ch. 32 - Prob. 2RQCh. 32 - Prob. 3RQCh. 32 - Prob. 4RQCh. 32 - Prob. 5RQCh. 32 - Prob. 6RQCh. 32 - Prob. 7RQCh. 32 - Prob. 8RQCh. 32 - Prob. 9RQCh. 32 - Prob. 1PCh. 32 - Prob. 2PCh. 32 - Prob. 3PCh. 32 - Prob. 4PCh. 32 - Prob. 5P
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