Question

In: Economics

Refer to the table for Moola given below to answer the following questions. MoneySupply MoneyDemand InterestRate...

Refer to the table for Moola given below to answer the following questions.

Money
Supply
Money
Demand
Interest
Rate
Investment at Interest
(Rate Shown)
Potential Real GDP Actual Real GDP at Interest
(Rate Shown)
$500 $800 2% $50 $350 $390
500 700 3 40 350 370
500 600 4 30 350 350
500 500 5 20 350 330
500 400 6 10 350 310


What is the equilibrium interest rate in Moola? %

What is the level of investment at the equilibrium interest rate? $

Is there either a recessionary output gap (negative GDP gap) or an inflationary output gap (positive GDP gap) at the equilibrium interest rate and, if either, what is the amount?

There is a of $ billion.

Given money demand, by how much would the Moola central bank need to change the money supply in order to close the output gap?

the money supply by $

What is the (expenditure) multiplier in Moola?

Solutions

Expert Solution

Money supply is equal to money demand at 500 when the rate of interest is 5%. Therefore the equilibrium interest rate is 5%

Investment is 20 when the rate of interest is 5%

Potential real GDP is 350 but when the investment is 20 the real GDP is 330. Therefore we have a recessionary gap and it is worth 20.

Money supply should be increased by 100

Investment will increase by 10 when the equilibrium interest rate becomes 4% and real income is increased by 20 to reach 350 which is the potential GDP. Therefore multiplier in this economy is 20/10 equals 2.


Related Solutions

  Refer to the table for Moola given below to answer the following questions Enter answers...
  Refer to the table for Moola given below to answer the following questions Enter answers as whole numbers a. What is the equilibrium interest rate in Moola?... percent. b. What is the level of investment at the equilibrium interest rate? $...? c. Is there either a recessionary output gap (negative GDP gap) or an inflationary output gap (positive GDP gap) at the equilibrium interest rate and, if either, what is the amount? Recessionary output or Gap Inflationary output gap...
Refer to the information provided in Table below to answer the questions that follow. Employed 148,297...
Refer to the information provided in Table below to answer the questions that follow. Employed 148,297 Unemployed 8,705 What is the number of labor force What is the rate of unemployment What is the cost of unemployment (Explain just one point)? Why high rate of unemployment can be considered as one of biggest issues for the economy.?
refer to the table of data below and answer the questions that follow economic state probability...
refer to the table of data below and answer the questions that follow economic state probability of economic state return on stock J return on stock K bear 0.25 -0.02 0.034 normal 0.60 0.138 0.062 bull 0.15 0.218 0.092 calculate the expected return of each stock if a portfolio was created with from 30% of stock j and 70% of stock k what is the expected return of the portfolio? calculate the standard deviation of each stock? calculate the covariance...
Exercise: answer the following questions in the space below a) Refer to the companies listed below....
Exercise: answer the following questions in the space below a) Refer to the companies listed below. Choose on company and perform a Swot analysis related to human resource management. Clearly explain each component of this analysis. Provide clear arguments (Avoid bullet format) Nestle Middle east Danone Emaar Ikea HSBC b) Analyze and discuss the employer brand of the company that you have chosen. And provide recommendations to develop it of improve it. Provide clear arguments (Avoid bullet format)
Answer the questions below using the information given in the following table. China France Pairs of...
Answer the questions below using the information given in the following table. China France Pairs of boots produced per hour 4 8 Bottles of wine per hour 2 16 Comparative advantage ? ? Which country has a comparative advantage in the production of boots? b. Provide the range of the international relative price of wine at which the two countries would trade.
Given this table. Answer the following questions in the box below. x 3 5 6 8...
Given this table. Answer the following questions in the box below. x 3 5 6 8 9 11 y 2 3 4 6 5 8 a) Find the Linear correlation Coefficient r. b) Is there a linear correlation between x & y? Explain your answer.
Use the table below to answer the questions below. The following prices are for call and...
Use the table below to answer the questions below. The following prices are for call and put options on a stock priced at $50.25. The March options have 90 days remaining and the June options have 180 days remaining. In your profit answers below, assume that each transaction is scaled by 100, reflecting the size of option contracts. Calls Puts Strike March June March June 45 6.85 8.45 1.20 2.15 50 3.90 5.60 3.15 4.20 55 1.95 3.60 6.15 7.00...
The following questions use the table below on soybean oil. Answer the following questions about an...
The following questions use the table below on soybean oil. Answer the following questions about an end user needing to purchase soybean oil. One soybean oil contract is 60,000 pounds (lbs). Now Later Cash Soybean Meal Market $0.335/lb $0.346/lb Futures Soybean Meal Market $0.3000/lb $0.311/lb 1) Is the individual concerned about price increasing or decreasing? 2) What is the initial action in the futures market: buy or sell? 3) What is the cash price paid/received by the individual later? 4)...
Values in the table below are approximate. Use these to answer the following questions and to...
Values in the table below are approximate. Use these to answer the following questions and to compare health impact of the two diseases. R-naught Incubation period Contagious Period COVID-19 2.5 10 days 2-3 days before symptoms to 10 days after Rabies 1.5 Several months From symptoms to 10 days after symptoms Recall that R-naught is the average number of additional cases that directly result from a single person bringing it into a fully susceptible community. Below, compare in the impact...
Refer to the gasoline sales time series data in Table below to answer the following (Copy...
Refer to the gasoline sales time series data in Table below to answer the following (Copy the file to Excel when done submit here) 1. Compute two- week , three-week and four-week moving averages for the time series. 2. Compute the MSE for the two- week, three-week and four-week moving average forecasts. (Look over the powerpoint) 3. Create a new column to show the trend line( y= mx+b) for the table below 4. What appears to be the best number...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT