Question
1 Short answers 1. (Wealth) Use the bond market equilibrium to graphically show what will happen to the bond interest rate if the citizens in
1 Short answers 1. (Wealth) Use the bond market equilibrium to graphically show what will happen to the bond interest rate if the citizens in a country suddently becomes wealthy because of discovering a new gold mine. Explain in details. 2. (Profitable investment) Suppose the new artificial intellegence technology provides more profitable investment opportunities to the public, graphically show how will it affect the bond interest rate in equilibrium. Explain in details. 3. (Inflation Expectation) Recent surveys show that the inflation expectation in Japan has been persistently decreased. Use the bonds market equilibrium model to graphically show what is the effect of a decrease in the inflation expectation on the bond interest rate. Explain in details. 4. (Money Market) Use money market equilibrium to graphically show what would happen to the nominal interest rate if money supply increases. Explian in details. 5. (Money Market) Use money market equilibrium to graphically show what would happen to the nominal interest rate if price increases. Explian in details.
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