RO L(R,Y) Ms/P L1 a) Based on the graph above, discuss what would happen to the interest rate starting at point 1. R RO L (R,Y) L L1 Ms/P 2 b) Based on the graph above, discuss what would happen to the interest rate starting at point 1. c) All other things being equal, draw a graph demonstrating an increase of money supply (MS) in the money market. What's the impact on the interest rate?

RO L(R,Y) Ms/P L1 a) Based on the graph above, discuss what would happen to the interest rate starting at point 1. R RO L (R,Y) L L1 Ms/P 2 b) Based on the graph above, discuss what would happen to the interest rate starting at point 1. c) All other things being equal, draw a graph demonstrating an increase of money supply (MS) in the money market. What's the impact on the interest rate?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter15: Monetary Theory And Policy

Section: Chapter Questions

Problem 1.2P

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Figure 3: Msl.Ms1 Interest Rate (%) 10% 8% 6% Md 100 200 Money (S million) 13. Refer to Figure 3. If the money supply increases from MSo to MS1: a) money demand must decrease for the money market to return to equilibrium. b) the interest rate will decrease to 6%. c) the interest rate will increase to 10%. d) the money market will return to equilibrium only if the money supply is reduced to its original level.
Q.1.5 Which one of the following statements is NOT true? (a) Money is the most liquid asset.(b) Money is a store of value.(c) Money is a unit of account.(d) Money is another term for income.Q.1.6 Which of the following will cause the demand curve for money to shift to theright?(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.Q.1.7 A budget deficit occurs when: (a) there is an increase in taxation.(b) government spends less than is generated by taxation.(c) government spending is very high.(d) Government spends more than is generated by taxation.
Economics Suppose the difference between the transactions velocity and the income velocity of circulation of money in an economy is 5 and the money value of total transactions is 6 times the money value of aggregate income. If the quantity of money in circulation is 1000 currency units, then the money value of aggregate income in currency units is (a) 1000 (b) 1200 (c) 1500 (d) 1800 please write and explain in paper
Which one of the following statements is NOT true? (a) Money is the most liquid asset.(b) Money is a store of value.(c) Money is a unit of account.(d) Money is another term for income.Q.1.6 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.Q.1.7 A budget deficit occurs when: (a) there is an increase in taxation.(b) government spends less than is generated by taxation.(c) government spending is very high.(d) Government spends more than is generated by taxation.
Q.1.6 Which of the following will cause the demand curve for money to shift to theright?(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.Q.1.7 A budget deficit occurs when: (a) there is an increase in taxation.(b) government spends less than is generated by taxation.(c) government spending is very high.(d) Government spends more than is generated by taxation.
3. Draw and correctly label a graph of the money market. On your graph demonstrate each of the following: (a) Identify the equilibrium interest rate. (b) Explain if the rate you identified in part (a) is a nominal or real rate. (e) On your graph demonstrate the effect of federal government engaging in a budget deficit reduction plan. (d) On your graph demonstrate the effect of the Federal Reserve engaging in a contractionary monetary policy.
1.13 Read the following extract and answer the question that follows. (4 marks)Yes, SANParks can refuse to take your cash, says the Reserve BankAt the start of September, South African National Parks (SANParks) will stop accepting cash payments at theentrances, and inside, some of its parks, a policy to be implemented across every national park during 2023.And that is quite alright, says the SA Reserve Bank, as custodian of the rules intended to manage the currency.SanParks announced its roadmap for going cash free – both for the convenience of visitors and for reasons ofsafety – on Wednesday.Source: https://www.businessinsider.co.za/sanparks-is-legally-allowed-to-refuse-cash-reserve-bank-says-2021-8Accessed: 23/08/21The impact of the above decisions by SANParks will have its impact on…a) …the M1 measure of money.b) …the M2 measure of money.c) …the M3 measure of money.d) …the number of notes and coins in circulation 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.
Suppose you receive Tk. 10,000 from your grandmother and deposits the money in a saving account. your grandmother gave you the money by writing a check on her saving account. Would the maximum increase in the money supply still be what you found it to be in part a) where you received the money from the sky? Why or why not? can anyone explain please why it will change
The following table gives the quantity of money demanded at various price levels (P), the money demand schedule. In the following table, fill in the column labeled Value of Money. Quantity of Money Demanded (Billions of dollars) Price Level (P) Value of Money (1/P) 0.80 1.25 1.00 1.00 1.33 0.75 2.00 0.50 2.0 2.5 4.0 8.0 Now consider the relationship between the quantity of money that people demand and the price level. The lower the price level, the less money required to complete transactions, and the less money people will want to hold in the form of currency or demand deposits. Assume that the Federal Reserve initially fixes the quantity of money supplied at $4 billion. Use the orange line (square symbol) to plot the initial money supply (MS₁) set by the Fed. Then, referring to the previous table, use the blue connected points (circle symbol) to graph the money demand curve. 2.00 1.75 1.50 0.75 0.50 0.25 ཱ་ཎྜ་ཉ་མ་༅་གླུ་སྒྲ་སྐྱ VALUE OF MONEY 1.25 Money Demand ° 1 2 3 4 5 B 7 QUANTITY…
(c) Explain how the GDP and the interest rate are related to the transactions and asset demands for money.
Please kindly assist with the following. Which one of the following statements is NOT true? (a) Money is the most liquid asset.(b) Money is a store of value.(c) Money is a unit of account.(d) Money is another term for income.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. A budget deficit occurs when:(a) there is an increase in taxation.(b) government spends less than is generated by taxation.(c) government spending is very high.(d) Government spends more than is generated by taxation. An example of an indirect tax is: (a) income tax. (b) secondary tax on dividends.(c) company tax.(d) value added tax.Which one of the following statements is INCORRECT? (2)(a) Provincial government forms…