FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2. Assume an economy is in a long-run equilibrium with real GDP equal to potential output. Now suppose increased financial innovation decreases people's demand for

image text in transcribed
2. Assume an economy is in a long-run equilibrium with real GDP equal to potential output. Now suppose increased financial innovation decreases people's demand for holding cash and chequable deposits. Use a graph to show and briefly state how this impacts interest rate, real GDP and the price level in the short-run. What kind of gap is created in this economy? Also show and explain how the economy can return to potential GDP in the long-run. [7

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

French Banking And Entrepreneurialism In China And Hong Kong From The 1850s To 1980s

French Banking And Entrepreneurialism In China And Hong Kong From The 1850s To 1980s

Authors: Hubert Bonin

1st Edition

0429560095, 9780429560095

More Books

Students also viewed these Economics questions

Question

★★★★★
Calculate the residuals and predicted values for the regression analysis in Exercise. a. Does the error variable appear to be normally distributed? b. Is the variance of the error variable constant?...

Answered: 1 week ago

Question

★★★★★
Is honey a cough remedy? Refer to the Archives of Pediatrics and Adolescent Medicine (Dec. 2007) study of honey as a remedy for coughing, Exercise 2.64 (p. 90). The coughing improvement scores for...

Answered: 1 week ago

Question

★★★★★
What areas of knowledge do I have?

Answered: 1 week ago

Question

★★★★★
The Mohawk Discount Store is designing a management training program for individuals at its corporate headquarters. The company wants to design the program so that trainees can complete it as quickly...

Answered: 1 week ago

Question

★★★★★
1) no load funds sell: A)At a discount B) above net asset value c)at net asset value D) below net asset value

Answered: 1 week ago

Question

★★★★★
An online store sells a product for which the daily demand is normally distributed with a mean of 120 units and with a standard deviation of 10 units. We assume the source of supply has a constant...

Answered: 1 week ago

Question

★★★★★
You are at a trendy cafe with your friend, Bill. Bill looks terrible and when you ask him what's wrong, he tells you he believes there is a problem with his ordering and accounts payable system which...

Answered: 1 week ago

Question

★★★★★
1.) (20 pts) Jobs arrive to a two-station serial line at a rate of 2 jobs per hour with deterministic inter- arrival times. Station 1 has one machine which requires exactly 29 minutes to process a...

Answered: 1 week ago

Question

★★★★★
Salubrity Plus is a medical equipment supply company with offices and retail locations in Ontario and Qubec. The organization started operations in 2005 and currently has an approximate annual...

Answered: 1 week ago

Question

★★★★★
A vendor for your part casting claims they redeveloped the casting alloy with less tensile variability. The vendor claims that the new material will show a 20 of 10, 95% of the time. A six sample...

Answered: 1 week ago

Question

★★★★★
The following accounts and their balances appear in the general ledger of NEWBERRY PROPERTIES INC. on June 30, 2017: Preferred stock, 2%, $75 par...........................................1,350,000...

Answered: 1 week ago

Question

★★★★★
Problem 11: The principal stresses at a point in a solid: = 60 MPa, = 35 MPa, 3 = 15 MPa Obtain (a) the maximum shearing stress and (b) the normal and shearing stresses on the octahedral plane.

Answered: 1 week ago

Question

★★★★★
Context, i.e. the context of the information presented and received

Answered: 1 week ago

Question

★★★★★
1. To gain insight into why we believe more in one type of information than another.

Answered: 1 week ago

Question

★★★★★
2. In this chapter, the reader should reflect on the following concepts: emo-tional information, concrete information, local information, the reference object, consensus information, conflict...

Answered: 1 week ago

Previous Question Next Question