EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 37, Problem 2P
Subpart (a):
To determine
Value of MV.
Subpart (b):
To determine
Value of MV.
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Students have asked these similar questions
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2.
3.
Which expression describes the flattest money demand schedule?
O a. 1=450-2(3)
O b. 1=450-9(3)
O c. L-5(200)-5(10)
O d. L=5(200)-8(10)
Which of the following will lead to an increase in the equilibrium interest rate in the money market?
O a. Increase in general price level
O b. An increase in income
O c. Decrease in general price level
d. The Central Bank increases money supply
Which of the following statements describes the LM curve?
O a. It has a negative slope.
O b. It describes the relationship between supply and demand of goods.
O c. It represents the combination of interest rate and income where the goods market is in equilibrium.
O d. None of the above
In which of the following situations would you prefer to be the lender?
1) Expected inflation rate is 7 percent and the interest rate is 9 percent
2) The interest rate is 25 percent and the expected inflation rate is 50 percent.
3) The interest rate is 13 percent and the expected inflation rate is 15 percent.
O 4) The interest rate is 4 percent and the expected inflation rate is 3 percent.
O 5) Expected inflation rate is 1 percent and the interest rate is 4 percent
O6) None of the answers are correct
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 37 Solutions
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- Figure 30-3 On the following graph, MS represents the money supply and MD represents money demand. O 2.0. O 14.3. O 2.9. VALUE OF MONEY O 0.35. 0.35 MS, 8000 MS₂ Refer to Figure 30-3. Suppose the relevant money-supply curve is the one labeled MS₂; also suppose the economy's real GDP is 65,000 for the year. If the market for money is in equilibrium, then the velocity of money is approximately 13000 QUANTITY OF MONEY MDarrow_forwardINTEREST RATE 12 10 co + 2 O 0 20 Money Supply known as the Money Demand 40 60 80 MONEY (Billions of dollars) 100 120 Money Demand Money Supply Suppose that for every increase in the interest rate of one percentage point, the level of investment spending declines by $0.5 billion. Based on the changes made to the money market in the previous scenario, the new interest rate causes the level of investment spending to by Taking the multiplier effect into account, the change in investment spending will cause the quantity of output demanded to by at every price level. The impact of an increase in government purchases on the interest rate and the level of investment spending is effect.arrow_forwardConsider a situation where the central bank increases the money supply. All other things being equal, if nominal GDP increased by $800 billion during a time when velocity was 4, by how much did the central bank increase the money supply? O $200 million $400 billion $400 million $200 billionarrow_forward
- The income elasticity of money demand is ny = 0.7 and the interest rate elasticity of money demand is nj = -0.02. Suppose that the central bank increases the money supply by 5%, real income increases by 2% and inflation is 3%. What is the percentage increase in the nominal interest rate? O -0.3 (or -30%) O 0.3 (or 30%) O-0.1 (or -10%) O 0.1 (or 10%)arrow_forwardesc > Moving to another question will save this response. Velocity of money depends on all of the following, except: Customs O Stability of money as store of value Inflation Rate Wage Rate Question 18 bike 2.jpg 101°F Sunny f1 ? 1 a 2 W # bike.jpg 3 10 $ 4 #bike 2 f5 % R LO 5 Earrow_forwardThe equation of exchange is given by MXV = PxQ, where M is the money supply, V is the velocity of money, P is the economy's price level, and Q is Real GDP. Suppose the following diagram shows the current aggregate demand (AD) and aggregate supply (AS) curves in a hypothetical economy. PRICE LEVEL 2 12 REAL GDP (Trillions of dollars) AD O AS 2 ?arrow_forward
- Assume, in the 3rd quarter of 2018 in the U.S., the velocity of money was 3.08 and the M2 money supply was $1,050 million. The average prices in the economy was $1.44. Based on this, what was the real GDP of the U.S. in the 3rd quarter of 2018. O a. $2,750 million Ob. $1,250 million O C. $2,000 million O d. 52.250 millionarrow_forwardWhat do you expect will happen to the price level and real GDP in the short run when the bank of Canada buys domestic government bonds given a positively sloped SRAS curve? Select one: O a. Both the price level and real GDP will cross out increase. O b. Both the price level and real GDP will decrease. cross out O c. The price level will increase while real GDP cross out will decrease. O d. The price level will decrease while real GDP cross out will increase. O e. There is no change either to the price level or cross out the real GDParrow_forwardDiscuss the following statements: a. The Keynesian multiplier is higher the higher is the degree of openness of the economy'. b. 'There is no easy policy answer when it comes to dealing with a negative supply shock'. Consider the following economy. The production function is F(K,L) = K0.3 Lº.7. The saving rate and the depreciation rate are respectively: s = 0.10 and 8 = 0.07. Population growth is 1%, i.e. n = 0.01. c. Derive the capital accumulation equation for this economy. d. Find the steady state value of the capital stock per capita. e. Suppose that the initial capital stock per capita is: k = 1.5. Discuss the process of convergence of the economy to the steady state using the appropriate diagram. f. Calculate the optimal saving rate of the economy and discuss whether the economy at the steady state over or under-accumulates capital.arrow_forward
- Suppose a customer makes a $2,280 cash withdrawal from Bank A. If the reserve requirement was total decrease in the money supply in the 6 percent, the deposit would ultimately lead to a economy, if all banks in the system lend out 100 percent of their excess reserves. O $2,143.20 O $2,280 O $28,500 O $35,720 $38,000arrow_forwardSuppose the money supply is $4 trillion; nominal GDP is $16 trillion; and real GDP is $12 trillion. Ceteris paribus, it follows that the price level is and the velocity is Select one: O a. 1.33 ; 4 O b. 3; 4 O c. 1.33; 3 O d. 4; 3arrow_forwardQuestion 20 of 2 Given an upward sloping aggregate supply curve, which of the following changes in the aggregate demand curve is observed when the Fed reduces the money supply? O a. The aggregate demand curve shifts leftward, raising real GDP and the price level. 4 O b. The aggregate demand curve shifts leftward, lowering real GDP but raising the price level. O c. The aggregate demand curve shifts rightward, raising real GDP and the price level. Od. The aggregate demand curve shifts leftward, lowering real GDP and the price level. Oe. The aggregate demand curve shifts rightward, lowering real GDP but raising the price level. bike 2 bike jpg.jpg ww & 8 OF bike 2.jpg ENG 4)arrow_forward
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