explain what happen to (1) MS and (ii) interest rates when the real economy expands (Y rises)
Question:
explain what happen to (1) MS and (ii) interest rates
when the real economy expands (Y rises) the demand for money expands. as a result, households hold more cash and supply of money expands
agree or disagree
a. decrease
b. remain unchanged
c. increase
d. agree
e. disagree
impact on MS
a. decrease
b. remain unchanged
c. increase
d. agree
e. disagree
impact on interest rate
a. decrease
b. remain unchanged
c. increase
d. agree
e. disagree
carefully explain the impact on the money demand curve, money supply curve, interest rate and the quantity of money due to each of the following.
the economy grows (GDP increases) but the central bank moves to keep interest rate constant
impact on money supply curve
a. shift inwards/to the left
b. shift outwards/to the right
c. decrease
d. increase
e. unchanged
impact on money demand curve
a. shift inwards/to the left
b. shift outwards/to the right
c. decrease
d. increase
e. unchanged
impact on quantity of money
a. shift inwards/to the left
b. shift outwards/to the right
c. decrease
d. increase
e. unchanged
impact on equilibrium interest rate
a. shift inwards/to the left
b. shift outwards/to the right
c. decrease
d. increase
e. unchanged
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 money supply curve
a. shift inwards/to the left
b. shift outwards/to the right
c. decrease
d. increase
e. unchanged
impact on money demand curve
a. shift inwards/to the left
b. shift outwards/to the right
c. decrease
d. increase
e. unchanged
impact on quantity of money
a. shift inwards/to the left
b. shift outwards/to the right
c. decrease
d. increase
e. unchanged
impact on equilibrium interest rate
a. shift inwards/to the left
b. shift outwards/to the right
c. decrease
d. increase
e. unchanged
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