Answer each question using the options provided Carefully explain the impact on the moneydemand curve, money supply curve, equilibriuminterest rate and the quantity of money due toeach of the following:The government receives a U.S. dollar loan andexchanges it for local currency at the centralbank so it can pay public sector salaries in localcurrency.Impact onmoney supplycurveImpact onmoneydemand curveImpact onquantity ofmoneyImpact onequilibriuminterest rateChoose...Choose...Choose...Choose...Choose...increase employmentdecrease wage ratedecrease employmentshift outwards / to the rightincrease wage ratechange in quantity is uncertainchange in wage rate is uncertain Ocurve unchanged (movementalong the curve)employment unchangedshift inwards / to the leftwage rate unchanged Carefully explain the impact on the moneydemand curve, money supply curve, equilibriuminterest rate and the quantity of money due toeach of the following:The government receives a U.S. dollar loan andexchanges it for local currency at the centralbank so it can pay public sector salaries in localcurrency.Impact onmoney supplycurveImpact onmoneydemand curveImpact onquantity ofmoneyImpact onequilibriuminterest rateChoose...Choose...Choose...Choose...Choose...unchangedshift outwards / to the rightshift inwards / to the leftdecreaseincrease

Money market: As the central bank issues the fresh currency and hence, they determine the level of…

Carefully explain the impact on the money demand curve, money supply curve, equilibrium interest rate and the quantity of money due to each of the following: The government receives a U.S. dollar loan and exchanges it for local currency at the central bank so it can pay public sector salaries in local currency. Impact on Choose... increase employment decrease wage rate decrease employment shift outwards / to the right O O

Carefully explain the impact on the money demand curve, money supply curve, equilibrium interest rate and the quantity of money due to each of the following: The government receives a U.S. dollar loan and exchanges it for local currency at the central bank so it can pay public sector salaries in local currency. Impact on Choose... increase employment decrease wage rate decrease employment shift outwards / to the right O O

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 5PA

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Similar questions

Howcantheprocyclicalmovementofinterestrates (risingduringbusinesscycleexpansionsandfalling during business cycle contractions) lead to a pro cyclical movement in the money supply as a result oftheBankofCanadaslendingpolicy?Whymight this movement of the money supply be undesir able?
List and describe thefactors that affectthe money marketand the equilibriuminterest rate
Question 10a. (i).Draw a graph showing equilibrium in the money market. Carefully label all curves andaxes and explainwhy the curves have the slopesthey do.(ii). Using the graph you prepared in a(i), illustrateand explain what happens when the Central Bankdecreases the money supply.(iii).When the Central Bank decreases the money supply, the equilibrium level of income changes. Illustrate andexplain how.
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Assume that Elike raises $5,000 in cash from a yard sale and deposits the cash in his checkingaccount at the Bank of Uchenna. By how much does the money supply immediately change as aresult of like's deposit?
Which of the following about saving deposits a-under M2 supply, they they are bank accounts that you cannot white a check from directly. generally moneyl to be kept asided. you can easily withdraw money cash from these aacounts at an automatic teller machine or back d- included in M1 money supply these are the monies held in checking accounts. they are called demand deposits or chekable deposits because the bank must give the deposit holder his money on demand when a check is written or a debit card is used c- included in M1 money supply therefore, very lliquid these are coins and bills that vcirvulate in an economy that are NOT held by the US treasury Federal reserve bank, or in any bank vaults so the cash you havae in your wallet pocket right now d- under M2 money sypplly funds that you invest in where the deposits of many investors are pooled together and invested in a safe way such as short term goverment bods.
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Suppose that the economy has the following money supply and demand equations: Money Supply: M = 8000Money Demand: M= 10,000 – 40,000rwhere money is in billions of dollars and interest rates, r , is written as a decimal(e.g., an interest rate of 10% would be written as .1 in the equation).A. Determine the equilibrium interest rate and quantity of money.B. What will happen in the money market if the interest rate is currently 10%?
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Suppose that the reserve requirement for checkingdeposits is 10 percent and that banks do not hold anyexcess reserves.a. If the Fed sells $1 million of government bonds,what is the effect on the economy’s reserves andmoney supply?b. Now suppose that the Fed lowers the reserverequirement to 5 percent but that banks chooseto hold another 5 percent of deposits as excessreserves. Why might banks do so? What is theoverall change in the money multiplier and themoney supply as a result of these actions?
Suppose that the economy has the following money supply and demand equations: Money Supply: M = 8000Money Demand: M= 10,000 – 40,000rwhere money is in billions of dollars and interest rates, r , is written as a decimal(e.g., an interest rate of 10% would be written as .1 in the equation).A. Determine the equilibrium interest rate and quantity of money.B. What will happen in the money market if the interest rate is currently 10%?What is the amount of excess supply of or excess demand for money?C. Show in graph that at this interest rate (10%) there is disequilibrium in themoney market.2. Assume that a particular bank has excess reserves of Php800,000 and checkabledeposits of Php1,500,000. If the reserve ratio is 20%, what is the size of the bank’sactual reserves?3. Suppose that GRAB Bank is a newly created bank in your hometown. Consider thefollowing transactions: Owners of the bank sold shares of stocks to the public (which includes owners’equity) amounting to P1,000,000. To fully…
Figure 31-3 On the following graph, MS represents the money supply and MD represents money demand. VALUE OF MONEY 0.6 0.45 5000 MS. MS. 9000 QUANTITY OF MONEY MO Refer to Figure 31-3. At the end of the first year, the relevant money-supply curve was the one labeled MS]. At the end of the second year, the relevant money-supply curve was the one labeled MS2. Assuming the economy is always in equilibrium, what was the economy's approximate inflation rate for the second year? 8.3 percent -33 percent 33 percent -25 percent