What is the difference between portfolio and transactions theories of money demand.

Q: If GDP is1,500 and the money supply is 400,what is velocity?

A: The quantity theory of money establishes the direct and proportional relationship between the price…

Q: If the central bank’s goal is to maximize output, what interest rate will we expect in equilibrium?

A: The equilibrium real interest rate is the real rate of return which must be maintained to keep the…

Q: Long term interests rates affects the demand for money more than short term interest rates.…

A: Demand for money is positively related with income and negatively related with short term interest…

Q: Which kind of monetary policy would you expect in response to high inflation: expansionary or…

A: Monetary policy refers to the action or intervention of the central bank in the market to make…

Q: If the Federal Reserve lowered the prime interest rate, the money supply would increase? True or…

A: Prime Rate is rate of interest banks charge on short-term loans to their best customers. As the…

Q: Evaluate the importance of monetary policy goals.

A: The term "monetary policy" refers to what the Federal Reserve, a major national bank, is doing to…

Q: Please explain three main objectives of monetary policy?

A: According to the given question Simply in simple words a monetary policy is known to be as that…

Q: Explain why low levels of economic confidence may hinder the effectiveness of monetary policy?

A: The credit-control system adopted by the central bank of a country to achieve its macroeconomic…

Q: How do monetary financial institutions create liquidity, pool risk, lower the cost of borrowing, and…

A: The monetary financial institutions such as banks, insurance companies, mutual funds, non-banking…

Q: Is Interest on Reserves Balances (IORB rate) a tool that the federal reserve uses to control the…

A: Tools for controlling the money supply are instruments and mechanisms used by central banks, like…

Q: What are the problems associated with these set of equations as a result of which the Fed has…

A: Though it gives the sense of a flow through time, the money supply is a stock at a certain point in…

Q: One of the advantages of monetary policy is its speed and flexibility, but there are limitations.…

A: Monetary policy is the policy of the central bank of the economy to influence the money supply in…

Q: WHAT ARE CONVENTIONAL MONETARY POLICY TOOLS?

A: Answer: Monetary policy: Money policy refers to the policies of the central bank of a country to…

Q: To what extent do you agree with the statement that the effectiveness of monetary policy on output…

A: The monetary policies are those policies which are enacted by the central bank of a country to…

Q: what is the view of Business cycles on money neutrality?

A: The basis of the neutrality of money theory is that money is a neutral factor that has no real…

Q: Describe the link between the interest rate and the demand for passive money balances.

A: The economies around the globe tend to work with the motive of enhancing their growth, and…

Q: Describe the cornerstone of monetary policy?

A: Monetary policy is the tool for the central bank(CB) of any economy to tackle some situations where…

Q: What are the difference between the Fisherian and Cambridge versions of the quan theory of money?

A: The quantity theory of money explains the factors which determine the general price level in the…

Q: Why does contractionary monetary policy cause interest rate to rise?

A:

Q: Discuss the major contributions and implications of the keynesians theory of money

A: The classical version of quantity (QTM) theory of money states the changes in money supply and…

Q: What would be the impact of a decrease in money supply? Group of answer choices Higher interest…

A: The essential means a national bank uses to execute an expansionary monetary policy is through open…

Q: How do expansionary, tight, contractionary, and loose monetary policy affect aggregate demand?

A: Expansionary or loose monetary policy- By expanding the money supply more than average or lowering…

Q: Explain why the Reserve Demand is perfectly elastic at Interest on Reserve Balance (IORB).

A: The demand for reserves in the market is typically a regular downward sloping demand curve due to…

Q: If you were to survey central bankers from around the world and ask them what they believe the…

A: The objective of the question is to understand what central bankers around the world believe to be…

Q: What is a Liquidity Preference Theory?

A: The economics as a study is based upon the idea that there is a limit to the resources present with…

Q: Why do Fed policies aim to keep the level of interest rates low in recent years? How have those…

A: Federal Reserve: It is a system of the USA in which this system helps the government to take care of…

Q: Explain how speculative demand for money, precautionary demand and transitionary demand affect the…

A: Money is anything that is socially accept for the exchange of goods and services. It refers to…

Q: Please explain thoroughly the limitations of using the monetary policy tools.

A: Monetary policy refers to the collection of tools that a central bank uses to stabilize the economy.…

Q: According to the portfolio theories of money demand, whatare the four factors that determine money…

A: The portfolio theory of money demand is a collaborative effort by various economists like Tobin,…

Q: According to the quantity theory of money (MV=PQ), how lowering interest rates by the CB affect…

A: The central bank is the apex monetary authority of an economy that is assigned the responsibility to…

Q: why are interest rate not affected by permanent changes in money supply in the long run

A: The rate of return is a proportion of the principal—the amount borrowed—that a lender charges a…

Q: Show that the Freidman's money equation is simply an extension of the general theory of demand for…

A: In monetary economics, the amount theory of money (QTM) states that the overall value level of goods…

Q: An economy with a population growth rate of 1.5 percent and a rate of technological growth of 2.5…

A: A) increase its saving rate to reach

Q: What is the quantitative theory of money? What are its components? If the Fed wants to have zero…

A: The quantitative hypothesis of money is a hypothesis in economics that recommends that there is an…