(b) List one assumption of the quantity theory of money. Based on the simple quantity theory of money, what would be the impact on the economy of increasing the money supply by 5%?
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(b) List one assumption of the quantity theory of money. Based on the simple quantity theory of money, what would be the impact on the economy of increasing the money supply by 5%?
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- A) What is the notable insight of the Quantity Theory of money? (a) An Increase in the quantity of money, ceteris paribus will result in inflation (b) A decrease in the quantity of money, ceteris paribus will result in inflation (c) An Increase in the quantity of goods and services, ceteris paribus will result in inflation (d) An Increase in the demand for money holding, ceteris paribus will result in inflation B) What is the primary purpose of the interest rate in Bagehot's rule? (a) To increase the revenue of the government (b) To decrease uncertainity (c) To eliminate moral hazard (d) To increase the revenue of the central bankExplain the quantity theory of money and explain how the money demand, money supply, and quantity of money are related to each other? Which variable (s) will be affected if the money supply increases in the economy? Take in context to what has been happening in the U.S economy in the past few years.In the money market when the money supply is increased, the interest rate falls by ________ when the interaction of the money market with the goods market is taken into account. a)a smaller extent b)All of the other three choices are possible. c)the same extent d)a greater extent
- Homework Question 22: Hyperdeflation Can Be a Bit Cryptic to Understand Bitcoin is an electronic currency, which means that instead of having physical notes and coins, the currency only exists online. Bitcoins are unique in that there is no entity or individual that can increase the supply of Bitcoins. Instead Bitcoins are created by a computer algorithm that currently adds a fixed number of Bitcoins into circulation every hour, the algorithm is designed to gradually reduce the number of Bitcoins being produced, eventually reaching a growth rate of zero in 2040. You have been given the task of thinking about the potential for Bitcoin to become widely Only a small group of online vendors initially accepted Bitcoin but more and more are accepting it over time in other words the volume of goods and services that can be purchased with Bitcoin has been rising rapidly. a) Reformulate the Quantity Theory of Money to apply to Bitcoin, i.e define what M, P, V and Y are in the context of…The three main influences of money demand (MD; i.e., shift factors) include all of the following EXCEPT: O The price level O Real GDP O The nominal interest rate O Financial technologyWhen the money market is depicted in a diagram with the value of money on the vertical axis, which statement best describes the long-run effects of an increase in money supply? a)The price level decreases, but the quantity of money demanded increases b)The price level and the quantity of money demanded increases c)The price level and the quantity of money demanded decreases d)The price level increases, but the quantity of money demanded decreases
- 6) State how each of the following would affect the quantity of money demanded. Does the change cause a movement along the money demand curve or a shift of the money demand curve (state the direction of the shift or movement)? a) Interest rates rises from 5% to 8%. b) The consumer price index (CPI) rises in the economy.Which of the following will cause the demand curve for money to shift to the right? (a) An increase in real Gross Domestic Product (GDP).(b) A decrease in the repo rate.(c) An increase in the quantity of money available.(d) A decrease in the quantity of money available.What is the most important feature of the quantity theory of money? and interpret Fisher's quantity theory in terms of demand for money
- When a consumer withdraws cash from a drawer in his house and deposits it in a savings account, the composition of the money supply immediately changes, and the size of the money supply may eventually alter as well. Demonstrate and explain how this activity may affect the money supply in an economy.(Let M(s): 'money supply' and price level: 'P'.) According to the Classical Quantity Theory of Money (with fixed velocity (V fixed), and fixed output level, (Q fixed in equilibrium from the supply side), in the short run), Group of answer choices A) an x% increase in M(s) will cause a smaller-than-x% increase in P. B) an x% increase in the money supply, M(s), will cause a greater-than-x% increase in the aggregate price level, P. C) none of the other options. D) an x% increase in the money supply, M(s), will not change P. E) an x% increase in M(s) will cause an x% increase in P.Multiple Choice Questions : Consider the dynamic version of the quantity theory of money. Which variables are exogenous?(Choose one or more.)A The rate of change of the stock of money.B The rate of change of the demand to hold money.C The rate of change of the (exchange) value of money.D The rate of change of the purchasing power of money.E The inflation rate. Consider the simple quantity theory of money. Which variables are exogenous?(Choose one or more.)A The stock of money.B The demand to hold money.C The (exchange) value of money.D The purchasing power of money.E The average level of prices.