Macroeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (7th Edition)
7th Edition
ISBN: 9780134472669
Author: Blanchard
Publisher: PEARSON
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Question
Chapter 5, Problem 4QAP
(a)
To determine
To analyse: The left hand side of the equation.
(b)
To determine
To analyse: The right hand side of the equation.
(c)
To determine
To analyze: The wayL(i) is represented in the figure referred.
(d)
To determine
To modify: The equation through graphs.
(e)
To determine
To analyze: The way an interest rate could be kept constant while an increase or decrease in output by changing the money supply.
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Students have asked these similar questions
Suppose that the Money Supply is currently at $13,000, and that Money Demand is given by:
MD= 23,000 - 2,000r
where r is the interest rate, and for the purposes of the functional form above, if the interest rate = 8%, the r = 8 for derterming MD.
Suppose that we start in equilibrium in the money market and the Central Bank targets the interest rate. If the Central Bank raises the
interest rate by 2%, then how large will the surplus in the Money Market be if the Central Bank does not adjust the Money Supply
(MS)?
Note: round your answer to two decimal places. Also, if the answer is $2,678 for example, input this as 2678.00
The money demand function is (M/P)d = Y-150rThe money supply M is 1,000 and the price level P is 2. For this economy, use a graph to illustrate the LM curve for r ranging from 0 to 8.
In class we assumed that money demand
depends upon income, Md = L(Y, i). However,
if people hold money as a medium of
exchange it may be that money demand
really should depend upon consumption, Md
= L(C, i). In other words, if people consume
more, they will also want to hold more
money. Suppose that consumption, as usual,
depends upon disposable income, C = C(Y –
T). Money demand will then also, indirectly,
depend upon disposable income, Md = L[C(y
- T), i]. True or False: In this case, a tax cut will
always increase in the short run
Chapter 5 Solutions
Macroeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (7th Edition)
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