If the velocity of money is 7, The price level increases from 100 to 120 due to a stimulus by the Central Bank. If the money supply increases by $1000 million and the initial money supply were $12000 million, using the quantity equation of money calculate its impact on the quantity of goods and services in the economy.

Booster class

Macroeconomics

Skill

Velocity and Quantity equation

answer

watching

188

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Darryn D'SouzaLv10

19 Oct 2020

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

Related questions

1. In a system of fractional-reserve banking, even without any action by the central bank, the money supply declines if households choose to hold (less, more) currency or if banks choose to hold (less, more) excess reserves.

2. If the Fed makes an open-market purchase of government bonds, it will (decrease, increase) the money supply. Whereas if there is an increase in the discount rate on Fed lending, it will (decrease, increase) the money supply.

3. Chloe takes $100 of currency from her wallet and deposits it into her checking account. If the bank adds the entire $100 to reserves, the money supply(decreases, doesn't change, increases), but if the bank lends out some of the $100, the money supply (decreases, doesn't change, increases).

4. If the reserve ratio is 0.25 and the central bank increases the quantity of reserves in the banking system by $120, the money supply increases by how much?

cyanworm559

1. (0.2 pt) In a system of fractional-reserve banking, even without any action by the central bank, the money supply declines if households choose to hold (less, more) currency or if banks choose to hold (less, more) excess reserves.

2. (0.2 pt) If the Fed makes an open-market purchase of government bonds, it will (decrease, increase) the money supply. Whereas if there is an increase in the discount rate on Fed lending, it will (decrease, increase) the money supply.

3. (0.2 pt) Chloe takes $100 of currency from her wallet and deposits it into her checking account. If the bank adds the entire $100 to reserves, the money supply (decreases, doesn't change, increases), but if the bank lends out some of the $100, the money supply (decreases, doesn't change, increases).

4.(0.2 pt) If the reserve ratio is 0.25 and the central bank increases the quantity of reserves in the banking system by $120, the money supply increases by how much? (Make sure to show all your work.)

chocolateswan996

Assume an economy with floating exchange rates, price level is 100, exchange rate is 20, money supply is 10 million. Then suddenly the central bank increases money supply with 100% and keeps money supply at that (higher) level permanently. Calculate real money supply (M/P) in the long run, nominal exchange rate in the long run and expected exchange rate. Describe what happens with nominal interest rate in the short run and in the long run and describe the development of the nominal exchange rate from short to long run.

Weekly leaderboard

Home

Homework Help 3,900,000

Economics 400,000

Unlock all answers

Related textbook solutions

Principles of Economics

Principles of Macroeconomics

Principles of Microeconomics

Related questions

Weekly leaderboard