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- Is it possible that money supply can be more than the money demand (this means that we can have too much money)?How does an increase in price level affect the money market? a. Money demand increases b. Money supply decreases c. Money demand decreases d. Money supply increasesWho determines money supply and how does the money supply curve look like?
- 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 bankHow does an increase in economic activity affect the money demand curve?What is the expected impact of a decline in the money supply to the US economy? A. Higher aggregate prices (inflation) B. Lower aggregate prices (deflation) C. There is no general relationship between the money supply and inflaton
- Empirical evidence that substantiates the Quantity theory includes which of the following? Select one or more: a. Countries with high rates of inflation over many years have high rates of growth of the money supply. b. In the US each year, the increase in the money supply is within a small margin of the increase in prices that year. c. Countries with high rates of inflation over many years have high rates of growth of real GDP. d. Countries with independent central banks tend to have high rates of inflation.The table below describes two different demands for money and the supply of money. Answer the following questions based on this table. Instructions: Enter your answers as a whole number. Total Demand for Money Price of Money Money Supply Demand 1 Demand 2 Total Money Demand 1 $400 $300 $150 $ 2 400 250 150 3 400 200 150 400 150 150 5 400 100 150 a. What is the price of money? O Consumer Price Index O Interest rate O Inflation rate O Production rate b. What type of demand for money does Demand 1 represent? O Unit-of-account demand O Asset demand O Total demand O Transaction demand c. What type of demand for money does Demand 2 represent? O Total demand O Unit-of-account demand O Transaction demand O Asset demand d. Complete the "Total Money Demand" column in the above table.Give typing answer with explanation and conclusion Briefly explain the relationship between money supply and prices using the appropriate assumptions in the money supply theory.
- What does the term exogenous money supply mean? a. The money supply is determined by external factors b. The money supply is controlled by households c. The money supply is determined by the central bank d. The money supply is determined by market forces.4. Velocity and the quantity equation Consider a simple economy that produces only pies. The following table contains information on the economy's money supply, velocity of money, price level, and output. For example, in 2019, the money supply was $280, the price of a pie was $7.00, and the economy produced 600 pies. Fill in the missing values in the following table, selecting the answers closest to the values you calculate. Nominal GDP Quantity of Money (Dollars) Price Level Quantity of Output Year Velocity of Money (Dollars) (Pies) (Dollars) 2019 280 7.00 600 2020 294 15 60 The money supply grew at a rete of from 2019 to 2020. Since pie output dd not change from 2019 to 2020 and the velocty or money 2he changen the morey supply was ref ected in changesin the prre eve. The inflation rate from 2019 to 2020 wasAccording to Monetarism, when does an increase in money supply change only price level andnot Real GDP? In the short run or in the long run? Explain your answer using a diagram.
