ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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The graph on the right depicts real money supply.
1.) Using the three-point curve drawing tool, draw the aggregate money demand
curve in the diagram to the right. Label this line 'L(R,Y)¹¹.
Now suppose that consumers' preferences change in such a way that they choose
to carry more cash.
2.) On the same graph, using the three-point curve drawing tool, draw the new
aggregate demand for money curve as a result of this change. Label this line
'L(R,Y)²¹.
Carefully follow the instructions above and only draw the required objects.
As a result of this change in preferences, equilibrium in the money market will be
at a
interest rate. Real money holdings will
Select
none
remain unchanged
rise
fall
T
Interest rate, R
Delete Clear
MS
Real money holdings
?
expand button
Transcribed Image Text:The graph on the right depicts real money supply. 1.) Using the three-point curve drawing tool, draw the aggregate money demand curve in the diagram to the right. Label this line 'L(R,Y)¹¹. Now suppose that consumers' preferences change in such a way that they choose to carry more cash. 2.) On the same graph, using the three-point curve drawing tool, draw the new aggregate demand for money curve as a result of this change. Label this line 'L(R,Y)²¹. Carefully follow the instructions above and only draw the required objects. As a result of this change in preferences, equilibrium in the money market will be at a interest rate. Real money holdings will Select none remain unchanged rise fall T Interest rate, R Delete Clear MS Real money holdings ?
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