Money Supply increases, the equilibrium interest rate will:

Assume that the money demand function is (M / P)d = 2,200 – 200r, where r is the interest rate in percent. If the price level is fixed at P=2, and the Fed wants to fix the interest rate at 7 percent, it should set the money supply at: a. 2,000. b. 1,800. c. 1,600. d. 1,400.

An increase in the interest rate will Group of answer choices increase the optimal money balance. either increase or decrease the optimal money balance depending on the level of current household wealth. lower the optimal money balance. have no impact on the optimal money balance.

Suppose the Fed announces that it is raising its target interest rate by 25 basis points, or 0.25 percentage point. To do this, the Fed will use open-market operations to the money by the public. Use the green line (triangle symbol) on the previous graph to illustrate the effects of this policy by placing the new money supply curve (MS) in the correct location. Place the black point (plus symbol) at the new equilibrium interest rate and quantity of money. Suppose the following graph shows the aggregate demand curve for this economy. The Fed's policy of targeting a higher interest rate will the cost of borrowing, causing residential and business investment spending to and the quantity of output demanded to at each price level. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

Suppose in the economy of Apple Republic, the demand for money is given by Md = $Y (0.3 - i), where $Y = 100 and the supply of money (Ms) is $20. a. What is the equilibrium interest rate (i)? Answer: i = [ Select ] v %. b. If the central bank increases money supply (Ms) to $25, what is the impact on the interest rate? Answer: Interest rate (i) will [ Select ] to [ Select ] %.

Scenario 2 Suppose the money demand is given by MdYx (0.4 - i) = where i is the interest rate. Suppose income Y totals 250. 9. Refer to Scenario 2. If the money supply is M³ = 25, what is the equilibrium interest rate? 10. Refer to Scenario 2. Suppose the Federal Reserve just met and decided they would like to decrease the interest rate by 4 percentage points (compared to the equilibrium rate you found in the previous question). What kind of monetary policy should it use, and what would the money supply have to equal to achieve that goal? (Your answer should be two items: first is expansion or contraction, the second is the actual amount the money supply should be.)

True or False 1) Starting from equilibrium in the money market, suppose the money supply increases. Other things being equal, this will cause an excess demand for money, leading people to sell bonds.

Suppose that money demand is given by the function MD=55+P, and the Bank of Canada maintains the supply of money at MS=$58b. If the Bank of Canada suddenly increases the money supply to MS'-$60b, what has happened to equilibrium value of money? a)It has decreased from 5 to 2 b)MD will shift, and the value of money will remain unchanged c)It has increased from 3 to 5 d) It has decreased from 1/3 to 1/5

Suppose the Federal Reserve has set the money supply at $4 million. The table below shows the interest rate and total demand for money. Interest Rate Demand (in millions) 20% $1 15 2 10 3 5 4 0 5   What is the equilibrium interest rate?   Multiple Choice   0 percent   20 percent   10 percent   5 percent

You are given the following information:   Money demand for transaction (Mdt)            =  0.2Y Money demand for speculation (Mds/P)       = 500  – 5,000r Money supply (Ms)       =  2,500 Price level (P)                   =  2 Income level (Y)      =  10,000      where r represents the rate of interest. Based on the above information,        calculate the equilibrium levels of interest rate and quantity of money.                        .                                                                      If the interest rate is fixed at 0.1, what is the quantity of money demanded and supplied.                                                                                                             Demonstrate your answers to parts (d)(i) and (d)(ii) in an appropriate diagram.