Econ question: a.Explain and show the impact on the money market when the Federal Reserve lowers the interest rate on bank reserves (the IORB). Graph and Detail the adjustment process. (the seps to equilibrium) b. How is the level of investment in the economy affected? Graph and explain.
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- Econ question: a.Explain and show the impact on the money market when the Federal Reserve lowers the interest rate on bank reserves (the IORB). Graph and Detail the adjustment process. (the seps to equilibrium) b. How is the level of investment in the economy affected? Graph and explain. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.How does the changes of interest rate(Monetary Policy) affect consumption?By using graphs, show and explain how an increase in money supply can affect the goods market by taking the link between two markets into account.
- Q8 Which of the following statements is consistent with a given (i.e., fixed) IS curve? Select one: a. A reduction in the interest rate causes money demand to decrease. b. A reduction in the interest rate causes investment spending to increase. c. An increase in government spending causes an increase in demand for goods. d. A reduction in the interest rate causes an increase in the money supply.Hey I need help with a macroeconomics question, thank you in advance! The answers to these questions are based on the Federeal Reserves Feb 1, 2023 press release: 1. What decision did the committee reach regarding the federal fund 2. What do you expect to happen to the money supply 3. What do you expect to happen to the inflationTask 3 Consider a closed economy where the goods and money markets are described by the following relationships: C = 200 + 0.9(Y – T) I = 400 – 15r M = 200 + Y – 100r P G = 150 T = 100 M = 2000 P = 2 Where Cis planned consumption, / is planned investment spending, Tis government tax revenues, G is government purchases, M is the money supply, P is the price level and r is the interest rate. a) Derive the two expressions for the IS and LM equilibrium relationships respectively. Sketch a graph of the two relationships. b) Calculate the equilibrium value of output Y and interest rate r (round off your answers to one decimal point). Compute also the level of consumption and investment spending in equilibrium and check whether the actual level of spending matches the equilibrium level of output. c) The government reduces taxation to T=50 in order to boost economic activity. Assume no changes in the values of all the other variables. 1. What is the immediate increase in income before the…
- Consider a simple economy that produces only cell phones. The following table contains information on the economy's money supply, velocity of money, price level, and output. For example, in 2019, the money supply was $240, the price of a cell phone was $7.20, and the economy produced 500 cell phones. Fill in the missing values in the following table, selecting the answers closest to the values you calculate.Suppose an economist believes that the price level in the economy is directly related to the money supply, or the amount of money circulating in the economy. The economist proposes the following relationship: P=A×MP=A×M • P=Price LevelP=Price Level • M=Money SupplyM=Money Supply • A=A composite of other factors, including real GDP, that change very slowly over time.A=A composite of other factors, including real GDP, that change very slowly over time. How might an economist gather empirical data to test the proposed relationship between money and the price level?The advent of interest-earning checking accounts in the early 1980s led many households to keep a larger proportion of their wealth in checking accounts. Use the aggregate demand– aggregate supply model to illustrate graphically the impact in the short run and the long run of this change in money demand. Be sure to label: i. the axes; ii. the curves; iii. the initial equilibrium values; iv. the direction the curves shift; v. the short-run equilibrium values; and vi. the long-run equilibrium values. State in words what happens to prices and output in the short run and the long run.
- Consider the money market in the accompanying graph. Initially, the equilibrium interest rate and quantity are represented by the point, El. Suppose the central bank reduces the money supply. Adjust the graph of the money market to illustrate this change and label the new equilibrium by moving the point, E2. After this recent change in the money supply, what is true about the point E1? The quantity of money demanded is more than the quantity of money supplied. The quantity of money demanded is less than the quantity of money supplied. The quantity of money supplied is more than the quantity of money demanded. Those selling interest-bearing nonmonetary assets will face market pressure to lower their interest rates. Interest rate (%) Incorrect 10 9 8 7 6 5 4 3 2 1 0 0 1 2 E2 Money Market EI 3 4 5 6 Quantity of money 7 8 MS MD 9 10Explain how an increase in a price level will affect the demand for money and the aggregate demand. Use relevant graphs to support your answer.In the market for money, use a graph to explain the effect of a decrease in the price level on the equilibrium interest rate. 1.) Using the line drawing tool, draw either a new demand or supply curve. Properly label your curve. 2.) Using the point drawing tool, plot the new equilibrium point. Carefully follow the instructions above, and only draw the required objects. How does the change in the interest rate affect planned investment spending, consumption spending, and net exports? The change in the interest rate demonstrated above planned investment spending, consumption spending, and 19 首忌 之 eds net exports. LIID Interest rate 11 MP Real money balances M 下一张
