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- Describe how and why demand for money would have been influenced by Covid-19 epidemic?Please complete the statements using the labels provided. Suppose that the Federal Reserve Bank wants to address high levels of unemployment in the economy. To do so, it would likely seek to increase If the Federal Reserve Bank is able to instigate the growth it desires, it will likely come at the cost of increasing Suppose that the Federal Reserve Bank achieves the growth it wants, but also experiences the negative consequences. As a result, it will seek to decrease nto a | , at the risk of leading the economy Answer Bank aggregate supply recession aggregate demand deflation inflation disinflationWhy has the FOMC maintained federal funds rate at their current level of 0 - 0.25% in its recent meeting on 16-17 March? What could be three possible explanations for this keeping in view the current conditions of the economy?
- How does Stephanie Kelton’s explanation of Modern Monetary Theory4 (MMT) affect your view of government spending? Provide specific examples and describe how MMT contributes to your understanding.Assume that the consumption function is giv Assume that the consumption function is given by C = 200 + 0.5(Y – T) and the investment function is I = 1,000 – 200r, where r is measured in percent, G equals 300, and T equals 200. Assume that the equilibrium in the money market may be described as M/P = 0.5Y – 100r, and M/P equals 800.What is the numerical formula for the IS curve?What is the slope of the IS curve? What is the numerical formula for the LM curve? Calculate the equilibrium r and Y. Calculate the government spending multiplier. en by C = 200 + 0.5(Y – T) and the investmentfunction is I = 1,000 – 200r, where r is measured in percent, G equals 300, and T equals 200. Assume that the equilibrium in the money market may be described as M/P = 0.5Y – 100r, and M/P equals 800.What is the numerical formula for the IS curve?What is the slope of the IS curve? What is the numerical formula for the LM curve? Calculate the equilibrium r and Y. Calculate the government spending…Identify the effect of decrease in bank rates on either demand or supply curve and the equilibruim interst rates.
- Q-3. The following equations describe an economy Consumption function Disposable Income Tax Function Investment Function Exogenous Government Expenditure C-20+0.75Yd Ya Y-T T=0.2Y I-500-15i G=400 M=10+0.1Y E=260 Mt-0.25Y Ma-125-50i Ms 250 Import Function Export Function Transactions demand for money Speculative demand for money Supply of money a. Derive the IS and LM curves b. Find the equilibrium income and interest rate c. Find the equilibrium trade balance d. What will be the change in equilibrium investment if the exogenous expenditure is increased by 115? [10] 2/3Give only typing answer with explanation and conclusion If a bank expects interest rates to go up in six months and it currently has a negative rate-sensitive six-month gap (RSA - RSL), what actions should it take, if any, to preserve or increase its net interest income (NII)?Read the scenario below and answer teh question that follows. The Federal Reserve Board announced an emergency rate cut on Sunday, March 15, lowering interest rates to near zero. This rate cut comes less than two weeks after the Fed cut interest rates by half a point and marks continued effort to minimize the economic impact of the coronavirus (COVID-19). Source: https://www.cnbc.com/select/impact-of-fed-rate-cut-amid-coronavirus-concerns/ A decrease in the rate of interest: A. Lowers the opportunity cost of money and leads to an increase in the quantity of money demanded. O B. Raises the opportunity cost of money and leads to a decrease in the quantity of money demanded. O C. Raises the opportunity cost of money and leads to an increase in the quantity of money demanded. O D. Lowers the opportunity cost of money and leads to a decrease in the quantity of money demanded.
- On the diagram sample (a) show the effect of decrease in money demand (money supply is fixed) on equilibrium on Financial market and on LM curve On the diagram sample (b) show the effect of decrease in money supply (money demand is fixed) on equilibrium on Financial market and on LM curve Hint: LM: M/P = Y*L(i)Analyse why modern central banks have tended to keep the interest rate at a given level rather than concentrating on maintaining fixed the supply of money.Q2-20 Other things equal, if the demand for money becomes more elastic, then the LM curve will become _______.In other words, a given rise in the interest rate will, in order for money market equilibrium to be preserved, be associated with a ________ rise in income. Select one: a. less elastic / smaller b. less elastic / larger c. more elastic / smaller d. more elastic / larger