Question
In: Economics
3. Explain. When money supply increases we have the following effects on interest rates (explain each...
3. Explain. When money supply increases we have the following effects on interest rates (explain each and include the direction of the impact): the liquidity effect, income effect, price level effect, and expected inflation effect
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
When money supply increases
When money supply increases interest rates fall and so aggregate demand shifts right. interest rates fall and so aggregate demand shifts left. interest rates rise and so aggregate demand shifts right. interest rates rise and so aggregate demand shifts left.
Explain the following economic relationships: interest rates and stock prices; money supply and excess liquidity and...
Explain the following economic relationships: interest rates and
stock prices; money supply and excess liquidity and stock price;
government budget deficit and interest rates; government budget
deficit and stock price; $ and trade balance; US versus foreign
interest rates and the $; demographics and agin and stock
prices.
Usually, when the supply of loanable funds increases, then interest rates: Select one: a. Remain unchanged....
Usually, when the supply of loanable funds increases, then
interest rates:
Select one:
a. Remain unchanged.
b. Increase.
c. Might increase or decrease.
d. Decrease.
Outward oriented policies have adverse effect on economic
growth.
Select one:
a. Fales.
b. True.
Human capital refers to society’s understanding of the best ways
to produce goods and services.
Select one:
a. Fales.
b. True.
If country A produces 6,000 units of goods and services using
600 hours of labor, and country B produces...
Explain how the increase in the supply of money affects the real and nominal interest rates.
Explain how the increase in the supply of money affects the real
and nominal interest rates.
If the central bank increases the money supply, then the nominal interest rate will ____ and...
If the central bank increases the money supply, then the nominal
interest rate will ____ and the exchange rate will ____.
A
rise; appreciate
B
rise; depreciate
C
fall; appreciate
D
fall; depreciate
Explain the effects of each of the following on the rates of gluconeogenesis and/or glycolysis. A....
Explain the effects of each of the following on the rates of
gluconeogenesis and/or glycolysis.
A. Increasing the concentration of blood glucose.
B. Increasing the concentration of glucose-6-phosphate.
C. Increasing the concentration of
fructose-1,6-bisphosphate.
D. Increasing the levels of ATP.
E. Increasing the concentration of AMP.
F. Decreasing the concentration of fructose-2,6-bisphosphate
G. Increasing the concentration of acetyl CoA
H. Increasing the concentration of citrate.
l. Following an increase in money supply, if the interest rates fall immediately and then eventually...
l. Following an increase in money supply, if the
interest rates fall immediately and then eventually rise higher
than the original level, then :
a. The liquidity effect is weaker than the income and
price level effect and there is fast adjustrnent
b. The liquidity effect is stronger than the income and
price level effect
c. The liquidity effect is weaker than the income and
price level effect and there is slow adjustment
d. The liquidity effect is stronger than...
The interest rate is 5 percent initially. Now the Money Supply increases and the interest rate...
The interest rate is 5 percent initially. Now the Money Supply
increases and the interest rate declines to 3.5 percent in the
short run. Let us assume two scenarios. In the first
scenario, the interest rate ends up at 4 percent in the long run,
but in the second scenario it ends up at 6 percent in the long run.
State what we are assuming about the liquidity effect (LE), income
effect (IE), price level effect (PLE), and the expected...
3. Using the money supply (M1) model developed in class, explain the likely effects on the...
3. Using the money supply (M1) model developed in class, explain
the likely effects on the money supply of the following. Be sure
your answer indicates what changes in the model.
a. the U.S. Treasury spends some of its account at the Fed
b. the Fed does an open market sale of bonds
c. banks lower the fees they had charged depositors each time a
depositor uses a debit or credit card to buy goods or services
d. the Fed...
3. Using the money supply (M1) model developed in class, explain the likely effects on the...
3. Using the money supply (M1) model developed in class, explain
the likely effects on the money supply of the following. Be sure
your answer indicates what changes in the model. (4 points
each)
a. the U.S. Treasury sells new U.S. bonds at auction and does
not spend the proceeds
b. more stores are willing to accept debit or credit cards for
transactions
c. banks start paying a higher interest rate on checkable
deposits
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