Compare Keynes Liquidity Preference Theory with the classical quantity theory of money. Explain measurement of money and money creation in Pakistan.
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- Compare Keynes Liquidity Preference Theory with the classical quantity theory of money.
- Explain measurement of money and money creation in Pakistan.
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- Why is it said that money is as money does? Does the Pakistani rupee perform all functions of money? Justify your answer. Compare Keynes Liquidity Preference Theory with the classical quantity theory of money. Explain measurement of money and money creation in Pakistan.Distinguish between Fisher’s quantity theory and Keynesian’s theory of money.Q. Compare Keynes Liquidity Preference Theory with the classical quantity theory of money.
- Discuss money supply and inappropriate government polices as causes of economicflatuationsIn contrast to the classical school of economists John Maynard Keynes has a different view of people's behavior in holding money. Explain how the theory of money demand according to John Maynard Keynes!In the monetary intertemporal model, the supply of money is determined by the government merged with the Bank of Canada. the sale of bonds by the chartered banks. Oprivate sector transactions. the Bank of Canada. foreign capital flows.
- It is not possible for the total value of production to increase unless the money supply also increases. After all, how can the value of the goods and services being bought and sold increase unless there is more money available.explain the assertion using the equation M = money supply, V = velocity of money, P = price level, Y = real GDP.In the country of Orcam, the velocity of money is constant. Real GDP grows by 2 percent per year, the money stock grows by 10 percent per year, and the nominal interest rate is 15 percent. Calculate the growth rate of nominal GDP.You are the new Governor of State Bank of Pakistan after Reza Baqir. For each of the situations listed below, decide if you would use Easy-Monetary policy or Tight-Monetary policy. Explain each scenario within 150 words. Scenarios: RGDP dropped from 3 percent to 1 percent in the last year. The CPI and GDP deflator have risen 3 percent in the last six months. Commercial interest rates are rising, but the SBP has not raised rates. RGDP is growing steadily, and prices are rising sharply. The Pakistan is experiencing both high inflation and high unemployment. We are in a recession. Factory orders are down, and the economy appears to be slumping. Unemployment is low and prices are rising steadily. Unemployment rates are pushing 11 percent while the CPI has fallen from 8 percent to 2 percent growth. We are in a recession but are experiencing high inflation. The money supply appears to be tight, and prices are on the rise.
- Which of the following are consequences of hyperinflation? Check all that apply. People cash their paychecks more quickly. Wages and prices spiral upward. People keep more currency on hand instead of spending it. Lending money generates a higher real return because nominal interest rates are higher.In an economy at its steady state, real GDP, Y, increases at the rate g+n, where g is the technological growth rate and n is the rate of population growth. The monetary base M is equal to nominal GDP divided by the velocity of i.e. M - PY/V where P is the price level. Thus, assuming the velocity of money is constant, the growth rate of the monetary base will be (approximately) money V ΔΜ =*+g+n M where is the inflation rate. The velocity of money is determined by the function V = V°ehi The nominal interest rate i is determined by i = r" +T, where the natural real interest rate r" is constant in steady state and taken as given. Assume that n = 0, g= 0.03, r" = 0.05, 6 =1, and V" = 20. (a) What is the seignorage as a fraction of nominal GDP, when inflation is a = 0.01? (b) What is the seignorage as a fraction of nominal GDP, when inflation is a =0.10? (c) What rate of inflation w maximizes seignorage? (d) What is the maximal seignorage as a fraction of nominal GDP?"According to Keynesian theory, an increase in the money supply can cause interest rates to fall without affecting nominal income. In this case, how does the velocity of money change? Explain and demonstrate using the money market graph."
