Question

In: Economics

Draw a money market

Draw a money market

Solutions

Expert Solution

Answer.) The following graph depict money market situations.

Initially market is in equilibrium at quantity of money Q and at nominal interest rate NIR. The demand for money increases as households decide to spend more money. Nominal interest rate increases to NIR1 as a result of these consumer expenditures.

In graph below the fed buys bonds causing an increase in money supply. Nominal interest rates decrease as a result of easy monetary policy.

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

Draw two money market graphs ( money supply & money demand) that demonstrates how the Fed...
Draw two money market graphs ( money supply & money demand) that demonstrates how the Fed closes the inflationary gap, and also a recessionary gap.
Macroeconomics For each of the following scenarios, draw the graph for the market of money and...
Macroeconomics For each of the following scenarios, draw the graph for the market of money and the shift that occurs for each of the following scenarios. Label both axis, curves, and equilibrium. m. Government decides to buy back bonds. n. Government decides to borrow money.
Macroeconomics For each of the following scenarios, draw the graph for the market of money and...
Macroeconomics For each of the following scenarios, draw the graph for the market of money and the shift that occurs for each of the following scenarios. Label both axis, curves, and equilibrium. (2pts) Government decides to buy back bonds. Government decides to borrow money.
Macroeconomics For each of the following scenarios, draw the graph for the market of money and...
Macroeconomics For each of the following scenarios, draw the graph for the market of money and the shift that occurs for each of the following scenarios. Label both axis, curves, and equilibrium. m. Government decides to buy back bonds. n. Government decides to borrow money. *Please show different shifts for each graph answer if they are different.
a. Draw a carefully labeled money market diagram to show the initial equilibrium of the quantity...
a. Draw a carefully labeled money market diagram to show the initial equilibrium of the quantity of money and the price level. b. Now suppose that changes in bank regulations expand the availability of credit cards, so the people need to hold less cash. Show (on the same diagram you drew above in part a) and explain how this will affect the demand for money. c. If the Bank of Canada wants to keep price level stable, what should it...
Draw side-by-side diagrams of the money market and FX market inthe short run. Show what...
Draw side-by-side diagrams of the money market and FX market in the short run. Show what happens to the home interest rate and the exchange rate when the real GDP of the home country decreases while the nominal money supply is unchanged, all else equal.
Consider the market for orange juice. Draw a correctly labeled set of axes. Draw a market...
Consider the market for orange juice. Draw a correctly labeled set of axes. Draw a market supply curve and a market demand curve. On the axes, label the equilibrium price P0 and the equilibrium quantity Q0. A new study is released that states folic acid in orange juice reduces the risk of cancer, Show what happens to the demand curve or the supply curve for orange juice . On the axes, label the new equilibrium price P1 and the new...
When the money market is depicted in a diagram with the value of money on the...
When the money market is depicted in a diagram with the value of money on the vertical axis, which of the following happens if the price level is above the equilibrium level? a. There is a shortage, so the price level will fall. b. There is a shortage, so the price level will rise. c. There is a surplus, so the price level will rise. d. There is a surplus, so the price level will fall.
14. A(n) ____ is not an interest-bearing account. a. money market mutual fund b. money market...
14. A(n) ____ is not an interest-bearing account. a. money market mutual fund b. money market deposit account c. NOW account d. asset management account e. regular checking account 15. Commercial banks are insured by the a. Financial Deposit Insurance Association. b. Federal Depositors Assurance Corporation. c. Federal Deposit Insurance Corporation. d. Financial Deposit Insurance Company. e. Federal Demand Deposit Corporation. 16. ____ is a benefit of using credit. a. The ability to buy expensive goods while spreading the payments...
Money Market Hedges. How does a money market hedge differ for an account receivable versus that...
Money Market Hedges. How does a money market hedge differ for an account receivable versus that of an account payable? Is it really a meaningful difference?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT