1 answer

6) Suppose an economy is in its long-run equilibrium and the real money demand function for...

Question:

6) Suppose an economy is in its long-run equilibrium and the real money demand function for the economy is (M/P) d =0.2Y. Now suppose suddenly money demand becomes (M/P) d =0.4Y.

a) Draw a graph and show the initial long-run equilibrium and then show the short-run equilibrium that would results from this change in money demand [Hint: You are drawing the graph from Chapter 10 but think about how this money demand change affects velocity from Chapter 5.]

b) Assuming policymakers take no action, how would the economy transition back to the long-run equilibrium? Show this on your graph from part a).

c) Briefly explain, could monetary policy change the money supply to offset this change in money demand? If so, how would they do that?


Answers

Solution: 6) Given (m/pds 0.2 y (initially) CMID) d = 0.4 y llater) short wn @ G Daph of initial long sun equilibrium and equlowey seal Gop Yu, causing a recesſionary gapin short run. LRASO Graph: SRASO ADO Yo Yo makers take no action then: b) If polc) could monetary policy change the money supply to offect this change in money demand; >> If condal bank decreated money sup

.

Similar Solved Questions

1 answer
Bindy Crawford created a corporation providing legal services, Splish Brothers Inc., on July 1, 2022. On...
Bindy Crawford created a corporation providing legal services, Splish Brothers Inc., on July 1, 2022. On July 31 the balance sheet showed: Cash $4,700; Accounts Receivable $6,150; Supplies $990; Equipment $8,650; Accounts Payable $7,850; Common Stock $10,550; and Retained Earnings $2,090. During Aug...
1 answer
2. Linear trend regression Aa Aa The U.S. Census Bureau collects data on the size and...
2. Linear trend regression Aa Aa The U.S. Census Bureau collects data on the size and location of the houses that are constructed each year in the United States. The table and corresponding plot that follow show annual time series data on the mean square feet of floor space in new one-family houses ...
1 answer
Order the steps to generate a transgenic mouse from when male and female mice are first...
Order the steps to generate a transgenic mouse from when male and female mice are first mated to breeding heterozygous offspring together to generate a homozygote. mate male and female mice breed heterozygous offspring together to generate a homozygote Answer Bank harvest fertilized eggs from mated ...
1 answer
Write a javascript that asks the user to input a number. The number is then passed into a functio...
Im lost I need help seriously Write a javascript that asks the user to input a number. The number is then passed into a function you write that contains a loop. The loop will loop the number you passed into the function and print out the word "CSU" that many times. For instance, if l ente...
1 answer
10/ Which signal is leading (dashed or solid)? Find the phase delay in degrees between the...
10/ Which signal is leading (dashed or solid)? Find the phase delay in degrees between the two signals. 0 12.51 17 -6 -8 t(mS)...
1 answer
Corner Bakery Payroll Report 31-Jan-20 Employees Job position Hours worked Hourly wage Regular pay Retirement Pay...
Corner Bakery Payroll Report 31-Jan-20 Employees Job position Hours worked Hourly wage Regular pay Retirement Pay after pre-tax deduction Social Security Federal Tax Net Pay Jack Grey Chef 35 $15.00 $525.00 15.75 $509.25 $28.01 $61.11 $420.13   &n...
1 answer
Problem 10-03A a-c On January 1, 2020, Bridgeport Company purchased the following two machines for use...
Problem 10-03A a-c On January 1, 2020, Bridgeport Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $48,000. Related expenditures included: sales tax $1,550, shipping costs $100, insurance during shipping $70, installati...
1 answer
Nuclear charge greater than 10 10. Rhenium has two naturally occurring isotopes: Re-185 with a natural...
Nuclear charge greater than 10 10. Rhenium has two naturally occurring isotopes: Re-185 with a natural abundance of 37.40% and Re-187 with a natural abundance of 62.60%. The sum of the masses of the two isotopes is 371.9087 amu. Find the masses of the individual isotopes....
1 answer
Part a: Record the above transactions. (Record journal entries in the order presented in the problem....
part a: Record the above transactions. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amo...
1 answer
2 Points Question 1 Beginning inventory, purchases, and sales for Item MMM8 are as follows: November...
2 Points Question 1 Beginning inventory, purchases, and sales for Item MMM8 are as follows: November 1 Inventory 109 15 9 Sale 95 16 Purchase 130 21 25 Sale 75 Assuming a perpetual inventory system and using the Last-in, first-out (FIFO) method, determine the cost of Goods Sold in November Add your ...
1 answer
Based in applications such as: stand-alone applications, entertainment systems, data collection and analysis system & systems...
Based in applications such as: stand-alone applications, entertainment systems, data collection and analysis system & systems of systems, explain why different application types required specialized software engineering techniques to support their design and development....
1 answer
6. Explain how human capital theory and signaling theory would answer each of the questions below...
6. Explain how human capital theory and signaling theory would answer each of the questions below. You should provide 2 distinct answers for each question. a) What happens to aggregate productivity in a country if more people go to college? (4 points) b) Will employers be willing to pay more for col...
1 answer
Accomplish it during class time so no delays in submission. Question 2 1 pts The Indian...
accomplish it during class time so no delays in submission. Question 2 1 pts The Indian government constructs houses for the homeless, to move them out f the slums. Soon as these houses are constructed, the homeless, rent them out nd moved to another slum. Where could the policy have gone wrong? Non...
1 answer
Which of the following medication decrease the hepatic production of glucose? a) Biguanides b) Meglitinides c)...
which of the following medication decrease the hepatic production of glucose? a) Biguanides b) Meglitinides c) Alpha-glucosidase inhibitors d) Sulfonylureas...
3 answers
Body mass index
people with a bmi less than 18.5 are often classed as underweight what percent of young women are underweight by this criterion? Normal mean 26.8 and standarddeviation 7.4...
1 answer
A Review Constants Periodic Table Part A A car with a total mass of 1500 kg...
A Review Constants Periodic Table Part A A car with a total mass of 1500 kg (including passengers) is driving down a washboard road with bumps spaced 6.0 m apart. The ride is roughest- that is, the car bounces up and down with the maximum amplitude-when the car is traveling at 6.4 m/s For the steps ...
1 answer
North Carolins A&T State University 11-9-2017 Dr. Julius L. Harp Organie Chemistry 222-01 Take-Home Test 2...
North Carolins A&T State University 11-9-2017 Dr. Julius L. Harp Organie Chemistry 222-01 Take-Home Test 2 Note: "You mast turn-in your examination on 8.5 X 14 papers in order for it to be credited." l-Nane each ofthe fi bdlow. Netse, Choose a total of throe problems inchusive of A IAI &...
1 answer
Pipelining improves the performance by reducing the execution time of each instruction. True False L A...
Pipelining improves the performance by reducing the execution time of each instruction. True False L A Moving to another question will save this response. Question 8 Write-allocate policy requires fetching the data block into the cache from memory when a write miss occurs. True False L A Moving to a...
1 answer
Analysis of structure Neglecting the weight of the bar, determine the normal force, shear force, and...
Analysis of structure Neglecting the weight of the bar, determine the normal force, shear force, and bending moment acting on the cross section. (a) the bar segment on the left of section 1; and (b) the bar segment on the right of section 1. у 2 m i 800 N/m 30° B A х 1 - 3 m 3 m...