A reduction in money supply will cause:a reduction in investment in the medium runO A.OB an increase in the interest rate in the medium runВ.Oca reduction in the interest rate in the short runO pa rise in real wage in the short runnone of the choices is correctOE.O E a proportionate rise in the price level in the medium run

Money supply represents the total stock of money held by the people and as bank deposits in an…

A reduction in money supply will cause: a reduction in investment in the medium run O A. OB an increase in the interest rate in the medium run Oca reduction in the interest rate in the short run O pa rise in real wage in the short run none of the choices is correct OE. O E a proportionate rise in the price level in the medium run

A reduction in money supply will cause: a reduction in investment in the medium run O A. OB an increase in the interest rate in the medium run Oca reduction in the interest rate in the short run O pa rise in real wage in the short run none of the choices is correct OE. O E a proportionate rise in the price level in the medium run

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The diagrams show the monetary equilibrium and the demand for investment. The economy begins with money supply Ms, money demand Mp, and investment demand ID. The interest rate is in and desired investment is lo. Interest Rate % O A. interest rates will fall and the quantity of desired investment expenditure will fall. O B. interest rates will rise and the quantity of desired investr expenditure will fall. C. interest rates will rise and the quantity of desired investment expenditure will rise. O D. interest rates will fall and the quantity of desired investment expenditure will rise. 00 .O Ms a. Beginning at the initial equilibrium, suppose the Bank of Canada increases the money supply. In this case, Quantity of Money Mp Interest Rate % Desired Investment Q
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Consider the short run and the long run and then choose the statement that is correct. O A. The real interest rate is independent of the inflation rate in the long run. B. The real interest rate is dependent on the price level in the long run. C. In the short run, money market equilibrium determines the price level. D. In the short run, other things remaining the same, a given percentage change in the quantity of money brings an equal percentage change in the price level.
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Sub : EconomicsPls answerin 15 mins if possible.Dnt CHATGPT.I ll upvote. Thank You
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