Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 25, Problem 21APA
(a)
To determine
Determine the changes in the nominal interest rate in the short run if the real GDP increases.
(b)
To determine
Determine the changes in the nominal interest rate in the short run if the money supply increases.
(c)
To determine
Determine the changes in the nominal interest rate in the short run if the price level increases.
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Students have asked these similar questions
What is the expected impact of a decline in the money supply to the US economy?
A.
Higher aggregate prices (inflation)
B.
Lower aggregate prices (deflation)
C.
There is no general relationship between the money supply and inflaton
How does an increase in price level affect the money market?
a. Money demand increases
b. Money supply decreases
c. Money demand decreases
d. Money supply increases
An increase in ________ decreases the quantity of money people want to hold.
a. the price level
b. real GDP
c. the interest rate
d. the quantity of money
Chapter 25 Solutions
Macroeconomics
Ch. 25.1 - Prob. 1RQCh. 25.1 - Prob. 2RQCh. 25.1 - Prob. 3RQCh. 25.1 - Prob. 4RQCh. 25.1 - Prob. 5RQCh. 25.2 - Prob. 1RQCh. 25.2 - Prob. 2RQCh. 25.2 - Prob. 3RQCh. 25.2 - Prob. 4RQCh. 25.2 - Prob. 5RQ
Ch. 25.3 - Prob. 1RQCh. 25.3 - Prob. 2RQCh. 25.3 - Prob. 3RQCh. 25.3 - Prob. 4RQCh. 25.3 - Prob. 5RQCh. 25.4 - Prob. 1RQCh. 25.4 - Prob. 2RQCh. 25.4 - Prob. 3RQCh. 25.5 - Prob. 1RQCh. 25.5 - Prob. 2RQCh. 25.5 - Prob. 3RQCh. 25.5 - Prob. 4RQCh. 25.5 - Prob. 5RQCh. 25.6 - Prob. 1RQCh. 25.6 - Prob. 2RQCh. 25.6 - Prob. 3RQCh. 25.6 - Prob. 4RQCh. 25 - Prob. 1SPACh. 25 - Prob. 2SPACh. 25 - Prob. 3SPACh. 25 - Prob. 4SPACh. 25 - Prob. 5SPACh. 25 - Prob. 6SPACh. 25 - Prob. 7SPACh. 25 - Prob. 8SPACh. 25 - Prob. 9SPACh. 25 - Prob. 10APACh. 25 - Prob. 11APACh. 25 - Prob. 12APACh. 25 - Prob. 13APACh. 25 - Prob. 14APACh. 25 - Prob. 15APACh. 25 - Prob. 16APACh. 25 - Prob. 17APACh. 25 - Prob. 18APACh. 25 - Prob. 19APACh. 25 - Prob. 20APACh. 25 - Prob. 21APACh. 25 - Prob. 22APACh. 25 - Prob. 23APACh. 25 - Prob. 24APACh. 25 - Prob. 25APACh. 25 - Prob. 26APACh. 25 - Prob. 27APA
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- At an equilibrium purchasing power of money A. People will stop working because they do not need any additional cash balances B. Overall prices will have no tender 2 change C. People have extra money to spend D. The demand for money is unlimitedarrow_forwardAccording to the quantity theory of money, if there is a significant increase in money supply there will be an increase in the a. Unemployment rate b. Loanable funds market c. Price level d. Real interest ratearrow_forwardAccording to the quantity theory of money, if there is a significant increase in money supply there will be an increase in the a. Unemployment rate b. Loanable funds market c. Price level d.Real interest ratearrow_forward
- Explain the impact of an increase in money supply in the short run and in the long run. Include a graph.arrow_forwardWhich of the following statements is false A. Money is not a comsumption or a capital good B. An increase in the money supply does not confer a general benefit on society C. Economic theory cannot tell us generally which groups benefit and which groups are injured by inflation D. Economic theory cannot tell us the supply of money that is proper for an economy to havearrow_forwardWhen the money market is depicted in a diagram with the value of money on the vertical axis, what would shift money demand to the left? a. an increase in the price level b. a decrease in the price level c. a decrease in real GDP d. an increase in real GDP ہےarrow_forward
- Question 12 If there is excess demand for money, then people will a. deposit more money into interest-bearing accounts, and the interest rate will fall. b. deposit more money into interest-bearing accounts, and the interest rate will rise. c. withdraw money from interest-bearing accounts, and the interest rate will fall. d. withdraw money from interest-bearing accounts, and the interest rate will rise.arrow_forwardWhen the supply for money increases and the demand for money reduces, there will be a. A fall in the level of prices b. An increase in the rate of interest c. A fall in the level of demand d. A decrease in the rate of interestarrow_forwardFigure 369-169 VALUE OF MONEY 5 2 MS. D B MS. A C Money Demand QUANTITY OF MONEY Refer to Figure 369-169. If the money supply is MS₂ and the value of money is 5, then the quantity of money demanded is greater than the quantity supplied; the price level will rise. demanded is greater than the quantity supplied; the price level will fall. supplied is greater than the quantity demanded; the price level will rise. supplied is greater than the quantity demanded; the price level will fall.arrow_forward
- Interest rates fall as the supply of money increases because a.businesses want to borrow more when the money supply increases. b. Aggregate demand increases. c. The demand curve for money slopes down. d. The demand curve for money shifts to the right.arrow_forwardIf an economy is operating at full employment and there is a substantial increase in the money supply, which of the following is most likely to happen? A. Inflation increases B. Interest rates increase C. Real GDP increases D. Unemployment increasesarrow_forwardWhich of the following leads to a lower level of unemployment in the long run? a. an increase in the money supply growth rate, but not an increase in the size of the money supply b. both an increase in the size of the money supply and an increase in the money supply growth rate c. neither an increase in the size of the money supply nor an increase in the money supply growth rate d. an increase in the size of the money supply but not an increase in the money supply growth ratearrow_forward
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