Suppose the money demand function is  = 1000 + 0.2Y - 1000 (r + πe).   Required (a.) Calculate velocity if Y = 2000, r = 0.06, and πe = 0.04. (b.) If the money supply (Ms) is 2600, what is the price level? (c.) Now suppose the real interest rate rises to 0.11, but Y and Ms are unchanged. What happens to velocity and the price level? (d.) For part (c.), if the nominal interest rate were to rise from 0.10 to 0.15 over the course of a year, with Y remaining at 2000, what would the inflation rate be?

Now, consider an economy in which the demand for money is of the formY / (1 + it)  for t = 0, 1, 2, · · · , where output is 150 and it denotes the nominal interest rate inperiod t. The real interest rate, denoted r, is constant and equal to 4%. In period0 and 1, the money supply is 100 and people expect that money supply wouldbe 100 forever. People have rational expectations. In period 2, the central banksurprises people and sets the money supply will grow at 2 percent forever, that is,M0 = 100, M1 = 100, M2 = (1.02)M1, M3 = (1.02)M2, and so on.   A . Find the inflation rate, nominal interest rate, real money balance in period 1,and expected inflation in period 2, given the information available in period1, π1, i1, M1 / P1 and, E1π2. B . Find the inflation rate, nominal interest rate, real money balance in period 2,  and expected inflation in period 3, given the information available in period 2, π2, i2, M2  /  P2  and E2π3.   C . Compare E1π2 and π2.

13) The aggregate demand curve shows a(n). relationship between the A) positive; interest rate and planned investment B) negative; interest rate and planned investment C) negative; interest rate and money demand D) inverse; price level and aggregate output

3.Consider an independently run hotel in Krems and briefly discuss how it might be affected by the following scenarios:   a) A rise in interest rates b) A fall in unemployment c) A fall in the exchange rate (i.e., the value of the euro decreases)  d) A rise in inflation

Assume the money supply is $1,000, the velocity of money is 12, and the price level is $4. Using the quantity theory of money: (a) Determine the level of real output. (b) Determine the level of nominal output. (c) Assuming velocity remains constant and that the economy is at full-employment equilibrium, what will happen if the money supply rises by 10%?

8. Macroeconomic factors that influence interest rate levels Apart from risk components, several macroeconomic factors—such as Federal Reserve (the Fed) policy, federal budget deficit or surplus, international factors, and levels of business activity—influence interest rates. Based on your understanding of the impact of macroeconomic factors, identify which of the following statements are true or false: Statements True False When the Fed increases the money supply, short-term interest rates tend to decline.       Actions that lower short-term interest rates will always lower long-term interest rates.       Long-term interest rates are not as sensitive to booms and recessions as are short-term interest rates.       The Federal Reserve’s ability to use monetary policy to control economic activity in the United States is limited because US interest rates are highly dependent on interest rates in other parts of the world.

Can you solve for d) please and thanks

a) Assume that the nominal return on U.S. government T-bills was 10% during 2002, when the rate of inflation was 6%. The real risk-free rate of return on theseT-bills was:      b) When individuals believe they have sufficient income and assets to cover their expenses while maintaining a reserve for uncertainties, they are most likely in the phase of the investment life cycle. gifting B. consolidation C. accumulation D. spending  c) Find the duration of a 3-year bond with annual coupon payments of $80 and a par value of $1,000. The current market price of the bond is $950.25. If the YTM of the bond dropped by 1%, what would happen to the bond price?

10 Investment Demand AS AD, (I-40) AD, (I=30) AD, (1=20) $10 20 Investment ($) 30 40 50 Real GDP ($) Refer to the diagrams. The numbers in parentheses after the AD1, AD2, and AD3, labels indicate the levels of investment spending associated with each curve, respectively. All numbers are in billions of dollars. If the interest rate is 4 percent and the goal of the Fed is full-employment output of Q, it should O increase the interest rate from 4 percent to 6 percent. decrease the interest rate from 8 percent to 4 percent. O decrease the interest rate from 8 percent to 6 percent. maintain the interest rate at 4 percent. Interest Rate (%) Price Level

d) Suppose the money demand function was of the following form: M^d / P = Y η What must the central bank do to achieve an inflation target of 2% over the long-run given a growth rate of income of 5% and an elasticity of money demand with respect to income of 0.8? You can assume that the real rate of interest, r, is fixed at 6%.