economics questions
Suppose that the money demand is given by, d M=K3D with av: 100b and also let = M5: 20b. If the Central Bank wants to achieve an interest rate equal to 0.08 (i.e. 8%) what should be the level that the money supply, assuming that Yremains the same? (please write your answer in billions of euros, e.g. 50b = 50) Answer: Suppose that the money demand is given by, Md=m5 -1) with Y= 1776 billion and also let = S: 181 billion What is the interest rate that clears the money market? (answer in the format 0.xxx, for example 0.121 for 12.1%) Answer: Consider a bond that promises to pay 100 in one year... What is the interest rate on the bond (i) if its price today is 75? (please answer in the x.xx format, e.g. 0.121 for 12.1%) Answer: Consider the following numerical model: C = 700 + 0.8YD I = 500-2000i+0.1Y G = 400 T = 500 If T decreases from 500 to 300, how much income (Y) changes for any given level of the interest rate in the goods-market equilibrium? (Add a + or - to the number you reach depending on whether the change is positive or negative) Answer: Suppose that a person's yearly income is 60 000. Also suppose that this person's money demand function is given by M =Y(0.30-i) Suppose the interest rate is 0.05 (i.e 5%). In percentage terms, what happens to this person's demand for money if her yearly income is reduced by 50% and the interest rate doubles to 10%? (Answer by writing a number from 0 to 100 and please add a + or - depending on whether the change is positive or negative) Answer: Suppose that a person's yearly income is 60 000. Also suppose that this person's money demand function is given by M =Y(0.30-i) What is this person's demand for money when the interest rate is 0.05 (Le. 5%)? Answer: Consider a bond that promises to pay $100 in one year... If i = 0.10 what is the price of the bond today