Rate (%) 10% 8% 6% MD 100 200 Money (S million) 25. Refer to Figure 3. If the money supply increases from MSa to MS1: a) money demand must decrease for the money market to return to equilibrium. b) the interest rate will decrease to 6%. 10%
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- Figure 3: Msl.Ms1 Interest Rate (%) 10% 8% 6% Md 100 200 Money (S million) 13. Refer to Figure 3. If the money supply increases from MSo to MS1: a) money demand must decrease for the money market to return to equilibrium. b) the interest rate will decrease to 6%. c) the interest rate will increase to 10%. d) the money market will return to equilibrium only if the money supply is reduced to its original level.Figure 1: MS Interest Rate (%) 5% MD 150 Money (S million) 21. Refer to Figure 1. At an interest rate of 4%, there is a: a) excess demand for money and the interest rate will decline. b) excess demand for money and the interest rate will rise. c) excess supply of money and the interest rate will decline. d) excess supply of money and the interest rate will rise.Figure 1: MS Interest Rate (%) 5% MD 150 Money ($ million) 20. Refer to Figure 1. At an interest rate of 8%, there is: a) excess demand for money and the interest rate will decline. b) excess demand for money and the interest will rise. c) excess supply of money and the interest rate will decline. d) excess supply of money and the interest rate will rise.
- Interest Rate Transactions Demand for Money Asset Demand for Money Money Supply 2% $220 $300 $460 4 220 280 460 6 220 260 460 8 220 240 460 10 220 220 460 Based on the given table, an increase in the money supply of $20 billion will cause the equilibrium interest rate to Multiple Choice fall by 4 percentage points. fall by 2 percentage points. Correct rise by 4 percentage points. rise by 2 percentage points.2. Suppose that in 2018 customers deposit $4,000 into their bank accounts. Based on the extended money multiplier calculated in part (1), calculate the total amount which the money supply in the banking system will eventually increase to. Show all steps involved in the calculation. part 1 answer DRR = Ratio (4% or 0.04) CDR = % of money in wallets (3% or 0.03) = (1 + 0.03) / (0.04 + 0.03) = 1.03 / 0.07 Answer = 14.71 Therefor Every $1 in the bank will allow the bank to create $14.71Which one of the following statements is NOT true? (a) Money is the most liquid asset.(b) Money is a store of value.(c) Money is a unit of account.(d) Money is another term for income.Q.1.6 Which of the following will cause the demand curve for money to shift to the right?(a) An increase in real Gross Domestic Product (GDP).(b) A decrease in the repo rate.(c) An increase in the quantity of money available.(d) A decrease in the quantity of money available.Q.1.7 A budget deficit occurs when: (a) there is an increase in taxation.(b) government spends less than is generated by taxation.(c) government spending is very high.(d) Government spends more than is generated by taxation.
- 8. The swimwear department's estimated sales for the Summer season were $800,000, with anticipated markdowns of 15%. At the end of the season, the buyer had taken $110,000 in markdowns. Were the actual dollar markdowns taken more or less than planned? Compare the estimated markdowns to the actual markdowns in both dollars and percentage.Refer to the information provided in Figure 11.4 below to answer the questions that follow. Refer to Figure 11.4. At an interest rate of 3%, there is an excess supply of money of $400 billion. an excess supply of money of $800 billion. an excess demand for money of $800 billion. an excess demand for money of $400 billion. Interest rate, r M' 400 800 Money, M (5 billions) Figure 11.4 1,2003. This question focuses on the market for central bank money. Assume that people hold no currency and that the ratio of reserves to deposits is 0.1. The demand for money money is given by Md = $Y (0.8-4i) The nominal income is $5000 and the supply of central bank money is $100. (a) What is the demand for central bank money? (b) Find the equilibrium interest rate in the market for central bank money.
- You have been promoted to head of Treasury and Investment Management at Ecobank andhave been handed information on a number of issues for which immediate answers are required.For each excerpt from the issues presented below answer the associated question(s):(i) Ecobank holds ¢500 million T-Bill but is in short of cash. It needs cash to meet therequirement of a customer who has come to withdraw ¢400 million. You have beenasked to approach Barclays Bank to sell the T-Bill for ¢495 million with agreementto repurchase within 4 working days.(a) How much in cedis does Ecobank lose in this transaction(b) What is the Repo Rate on this transaction?INTEREST RATE (Percent) 18 15 2 so 3 0 0 20 Money Supply Money Demand 40 60 80 MONEY (Billions of dollars) 100 120 Money Demand Money Supply Following the price level increase, the quantity of money demanded at the initial interest rate of 9% will be supplied by the Fed at this interest rate. As a result, individuals will attempt to will bonds and other interest-bearing assets, and bond issuers will realize that they equilibrium is restored in the money market at an interest rate of % than the quantity of money their money holdings. In order to do so, they interest rates untilInterest rate 2% 4 6 8 10 Transaction demand for money $220 220 220 220 220 Asset demand for money $300 280 260 240 220 Money supply $460 460 460 460 460 1. The total demand for money curve in the above market for money would graph as a: A) vertical line. B) horizontal line. C) line sloping upward to the right. D) line sloping downward to the right.