Suppose the money demand function is given by: M P = hye-ki where h and k are positive constants and e is the base of natural logarithms. Solve for the rate of money growth which would maximise revenue from seigniorage.
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![Economics
Suppose the money demand function is given by:
M
= hYe-ki
P
where h and k are positive constants and e is the base of natural logarithms. Solve for the
rate of money growth which would maximise revenue from seigniorage.
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- Hyperinflation is characterized by lower costs for goods, such as food. O True O FalseBetween a trough and a peak, the economy goes through a(n) Ohyperinflation. Obust. Orecession. O expansion. QUESTION 16 A period when the economy shrinks is known as O a recession. O a contraction. O a slump. O All of these. QUESTION 17 Dean borrows $400 from Tim. Tim wants to make a 10% real return on his money, so they both agree on a 10% interest rate paid next year. Dean and Tim did not anticipate any inflation, yet the actual inflation turned out to be 4% next year. In this case, O Dean is better off. O Tim will receive more than 10% of real rate of return a year from now. O Dean will pay $56 a year from now on. Tim is better off.Consider the market for loanable funds. Suppose the demand for loans is given be i=9-Q+π, and the supply of loans is given by i=Q/2+π, where π represents inflation. Now suppose that π=5 (instead of 3, in the previous problem). What is the equilbrium quantity of loans and what is the corresponsing interest rate? Q*=8, i*=6 Q*=3, i*=6 Q*=6, i*=8 Q*=6, i*=6
- In section 5.2 we showed that if the money stock follows a mst-order autoregressive process with c (a) Give the economic intuition behind this result. (b) Suppose that the growth rate of money follows a stable mst-order autoregressive process. Solve for the process for the price level. (c) Does the same characterization hold with the addition of the words "relative to trend" following high and low?Optimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 0.75% at a time when inflation is around 1.65%. For the average saver, the real rate of interest on his or her savings is .......???%. (Round your response to two decimal places and use a minus sign if necessary.) If banks expect that the rate of inflation in the coming year will be 4.65% and they want a real return of 7.5% on a certain category of loans, then the nominal rate they should charge borrowers on those loans is .......???%. (Round your response to two decimal places.) If the economy experiences an unexpectedly low rate of inflation, the group that would tend to benefit is ___________. A. debtors (people or businesses who owe money). B. creditors (people or institutions that are owed money). C. both would benefit equally. D. neither benefits.Consider the following extract and then answers the questions that follow: How SA's recession is impacting consumer spending Consumers are actively doing pre‐shopping research either through broadsheets or online, and comparing retailers’ offerings to seek out the best value before even leaving the house. Consumers simply no longer purchase certain items, pointing to their extreme need for frugality in current market conditions. Added to this, consumers have also changed the way they use these products in their homes to maximise usage and minimise wastage. This includes the alternative use of products, like using margarine in place of cooking oil and fragranced body lotion instead of perfume. Q1. Discuss the impact of the economy on consumer behaviour.Note: it is important that you consider using examples that is relevant and specific to the scenario provided when responding to this question. Q2. Finding cheaper prices online is one driver for online shopping. Describe any four other…
- Is an increase in real interest rate always proportional to an increase in the growth rate of money supply (long run)?The table below shows the amount of savings and borrowing in a market for loans to purchase homes, measured in millions of dollars, at various interest rates. InterestRate QuantitySupplied QuantityDemanded5% 98 2216% 129 1917% 160 1608% 178 1429% 196 12410% 214 106 What is the equilibrium interest rate and quantity of loaned funds? r = % Q = Suppose there is a decrease in demand of money, what will happen to interest rates and quantity? Increase in Interest Rates, Increase in Quantity?Increase in Interest Rates, Decrease in Quantity?Decrease in Interest Rates, Increase in Quantity?Decrease in Interest Rates, Decrease in Quantity?Suppose John Smith signs up to a fixed- interest mortgage. Then there is some unexpected inflation and following this John Smith spends less on consumption (in real terms). For simplicity, note that his wages have been indexed for inflation so that his real take-home wage has remained constant. Explain this fall in consumption.
- Consider the market for loanable funds. Suppose the demand for loans is given by i= 40-Q+π, and the supply of loans is given by i= -30+Q+π, where π represents inflation. In the case of π=5, what is the equilbrium quantity of loans and what is the corresponsing interest rate? Q*=70, i*=45 Q*=10, i*=35 Q*=35, i*=10 Q*=45, i*=70please HAND WRITTEN Graphically show) how an exogenous increase in Money Demand affects aggregate output, interest rate, the price level, the wage.Explain your shifting in logical progression.Clearly state the final results.Label all curves/lines properly.Suppose the US economy enters a recession. During the recession, inflation falls and interest rates rise. What kind of change ("shock") to demand and or production is likely cause of the recession? Answer in one short paragraph. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.
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