Figure 31-2 In the graph, MS represents the money supply and MD represents money demand. The vertical axis is the value of money measured as 1/P and the horizontal axis is the quantity of money. Money Supply 0.6 0.3 5000 MD₂ MD, Refer to Figure 31-2. If the relevant money-demand curve is the one labeled MD1, then the equilibrium value of money is 0.3 and the equilibrium price level cannot be determined from the graph. 0.3 and the equilibrium price level is 3.3. 3.3 and the equilibrium price level is 0.3. 3.3 and the equilibrium price level cannot be determined from the graph.

Suppose that the following system of equations describe the macroeconomy of a hypothetical country: Y= C(y)+I(i)+G : IS or goods market M/p=L(i,y) : LM or money market   a) Get the total differentials of the above system of equations and put your answer in matrix representation. b) Taking money supply and government expenditure as exogenous and the price level as fixed, determine and provide economic intuition for the signs and magnitudes of the following multipliers i) dY/dG ii) di/dG c) For a simultaneous increase in both the interest elasticity of investment and interest elasticity demand for money parameters, determine the net effect on the values of the multipliers in part b). d) For a horizontal LM curve, determine the numerical values of your answers in part b) above if: Marginal propensity to consume=5/6   Tax rate=0.25 Interest elasticity of investment=5 Interest elasticity of demand for money=50 Income elasticity of demand for money=2

Which of the following statements are true based on these graphs? Check all that apply. The unemployment rate is currently 6% higher than the natural rate of unemployment. The natural level of output is $9 trillion. The current quantity of output is greater than potential output. Suppose the central bank of the economy increases the money supply. Show the long-run effects of this policy on both of the graphs by shifting the appropriate curves. The long-run effect of the central bank's policy is in real GDP. in the inflation rate, in the unemployment rate, and

(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%?

Show the impact of the increase in government purchases on the interest rate by shifting one or both of the curves on the following graph. INTEREST RATE 12 10 8 2 0 0 20 Money Supply known as the Money Demand 40 60 80 MONEY (Billions of dollars) 100 120 = Money Demand Money Supply ? Suppose that for every increase in the interest rate of one percentage point, the level of investment spending declines by $0.5 billion. Based on the changes made to the money market in the previous scenario, the new interest rate causes the level of investment spending to by Taking the multiplier effect into account, the change in investment spending will cause the quantity of output demanded to by at every price level. The impact of an increase in government purchases on the interest rate and the level of investment spending is effect. Use the purple line (diamond symbol) on the graph at the beginning of this problem to show the aggregate demand curve (AD3) after accounting for the impact of the increase…

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u10. Using the demand and supply schedule for money shown below, do the following: a)Graph the demand for and the supply of money curves. b)Determine the equilibrium interest rate. c)Suppose the RBA decreases the money supply by $5 billion. Show the effect in your graph and describe the money market adjustment process that is likely to follow. What is the new equilibrium rate of interest? Interest rate (%) Demand for money (billions of dollars) Supply of money (billions of dollars) 4 10 30 3 20 30 2 30 30 1 40 30

The money demand function is (M/P)d = Y-150rThe money supply M is 1,000 and the price level P is 2. For this economy, use a graph to illustrate the LM curve for r ranging from 0 to 8.

Let M be the quantity of money and i the interest rate in decimal form. Suppose that money demand is given by   M​ =100−20×​(1+​i)   and that money supply is M​ = 79. Then the interest rate i is

thanks in advance. YD = Y+TR-TA.