suppose that the money supply and the nominal GDP are $100 billion and $500 billion, repsectively. If the central bank reduces the money supply by $10 billion, by how much wil the nominal GDP have to fall to restore equilibrium, according to the monetarists perspective?
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suppose that the money supply and the nominal
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- Which of the following statements is true? Oa. In the monetarist transmission mechanism, if individuals are faced with an excess supply of money, they spend that money on a wide variety of goods-not just bonds or other assets, as is the case in the Keynesian transmission mechanism. O b. In the monetarist transmission mechanism, the aggregate supply curve is downward sloping. Oc. In the monetarist transmission mechanism, there is a need for the money market to affect the loanable funds market or investment before aggregate demand will be affected. Od. In the monetarist transmission mechanism, changes in the money market indirectly affect aggregate demand.Which statement is true? O Austrians believe that financial markets are always efficient and that no central bank intervention will cause a distortion (S=1). O Monetarists, Real Business Cycle Theorists, and Austrian Business Cycle Theorists all believe that business cycles are a result.of bad monetary policy. O Monetarists believe that financial markets are efficient (S=1), whereas Keynesians belie financial markets are prone to failure (S 1). O Monetarists believe that financial markets are prone to failure (S#l), whereas Keynesians believe fınancial markets are efficient (S=1).Explain why it is not possible for growing economies to have price stability whenthe money supply is constant
- Suppose that the reserve requirement for checkingdeposits is 10 percent and that banks do not hold anyexcess reserves.a. If the Fed sells $1 million of government bonds,what is the effect on the economy’s reserves andmoney supply?b. Now suppose that the Fed lowers the reserverequirement to 5 percent but that banks chooseto hold another 5 percent of deposits as excessreserves. Why might banks do so? What is theoverall change in the money multiplier and themoney supply as a result of these actions?Suppose that the economy has the following money supply and demand equations: Money Supply: M = 8000Money Demand: M= 10,000 – 40,000rwhere money is in billions of dollars and interest rates, r , is written as a decimal(e.g., an interest rate of 10% would be written as .1 in the equation).A. Determine the equilibrium interest rate and quantity of money.B. What will happen in the money market if the interest rate is currently 10%?What is the amount of excess supply of or excess demand for money?C. Show in graph that at this interest rate (10%) there is disequilibrium in themoney market.2. Assume that a particular bank has excess reserves of Php800,000 and checkabledeposits of Php1,500,000. If the reserve ratio is 20%, what is the size of the bank’sactual reserves?3. Suppose that GRAB Bank is a newly created bank in your hometown. Consider thefollowing transactions: Owners of the bank sold shares of stocks to the public (which includes owners’equity) amounting to P1,000,000. To fully…Suppose that the economy has the following money supply and demand equations: Money Supply: M = 8000Money Demand: M= 10,000 – 40,000rwhere money is in billions of dollars and interest rates, r , is written as a decimal(e.g., an interest rate of 10% would be written as .1 in the equation).A. Determine the equilibrium interest rate and quantity of money.B. What will happen in the money market if the interest rate is currently 10%?
- 1. Suppose that the economy has the following money supply and demand equations: Money Supply: M = 8000Money Demand: M= 10,000 – 40,000rwhere money is in billions of dollars and interest rates, r , is written as a decimal(e.g., an interest rate of 10% would be written as .1 in the equation).A. Determine the equilibrium interest rate and quantity of money.B. What will happen in the money market if the interest rate is currently 10%?What is the amount of excess supply of or excess demand for money?C. Show in graph that at this interest rate (10%) there is disequilibrium in themoney market.In the above figure, suppose that the economy has moved from point Dto point B.According to the monetarist theory of the business cycle, what could have caused this movement? Select one: O a.a decrease in the money wage rate b. an increase in the money wage rate c. an increase in the growth rate of the quantity of money O d. an increase in uncertainty about future sales and profitsWhich monetary policy tool can the Federal Reserve use to conduct an expansionary monetarypolicy (please state at least one instrument)? Which monetary policy instrument can the Fed useto conduct a restrictive monetary policy? Assume the country is experiencing highunemployment and a recession, such as during 2001, 2008-2009, and 2020. What is the Fedlikely to do in this scenario? Discuss the effects of such policy on the economy. Can you givea specific example to what the Fed did during any of those recessions? This is not a writing, it is economic.
- Which of the following would be classed as an expansionary monetary policy? O A. A decrease in the quantity of money. В. A decrease in interest rates. С. An increase in government taxation. O D. An increase in government expenditure. O E. An increase in VAT.Which of the following is a position held by monetarists? O Aggregate demand depends on the money supply and on velocity. The short-run aggregate supply curve is horizontal. The economy is unstable; wages and prices are inflexible. PRICE LEVEL The velocity of money is constant. Initially, the economy is in long-term equilibrium. Suppose there is a decrease in velocity-that is, there is a decrease in the average number of times a dollar is spent to buy goods and services. Show the long-run effect of this change according to the monetarist view, ceteris paribus, by dragging one or both curves on the graph below. REAL GDP SRAS AD AD SRAS (?)"Under a regime of full monetary accomodation, if the output gap rises, " O Equilbrium money increases and the interest rate goes up Equilbrium money decreases and the interest rate goes down O Equilbrium money increases and the interest rate goes down O Equilbrium money decreases and the interest rate goes down O Equilbrium money increases and the interest rate stays constant