The figure shows the demand for money curve in Epsilon. The Fed wants the interest rate to be 6 percent a year.If the interest rate is 5 percent a year, do people buy or sell bonds?Question HelpDoes the price of a bond rise or fall? Does the interest rate rise or fall?Interest rate (percent per year)7-Draw the supply of money curve if the Fed wants the interest rate to be 6 percent a year. Label it.Draw a point at the equilibrium in the money market.6-If the interest rate is 5 percent, people willbonds.5-Bond pricesand the interest rate willO A. fall; fall4-B. rise; fallC. rise; riseMDO D. fall; rise3+2.82.93.03.13.2Real money (trillions of 2005 dollars)>>> Draw only the objects specified in the question.Click the graph, choose a tool in the palette and follow the instructions to create your graph.DII888F12F10F11F7F8F9F5F6escF2F4F3F1&#!delete%3D456781PTYQWtabJKFAcaps lockMCVshiftoptioncommandcommandoptionfncontrolI

The figure shows the demand for money curve in Epsilon. The Fed wants the interest rate to be 6 percent a year. Interest rate (percent per year) If the interest rate is 5 percent a year, do people buy or sell bonds? Does the price of a bond rise or fall? Does the interest rate rise or fall? Draw the supply of money curve if the Fed wants the interest rate to be 6 percent a year. Label it. Draw a point at the equilibrium in the money market. If the interest rate is 5 percent, people will bonds. Bond prices and the interest rate will MD O A. fall; fall O B. rise; fall 29 10 28 Real money (trilions of 2005 dollars) O C. rise; rise O D. fall; rise > Draw only the objects specifed in the question

The figure shows the demand for money curve in Epsilon. The Fed wants the interest rate to be 6 percent a year. Interest rate (percent per year) If the interest rate is 5 percent a year, do people buy or sell bonds? Does the price of a bond rise or fall? Does the interest rate rise or fall? Draw the supply of money curve if the Fed wants the interest rate to be 6 percent a year. Label it. Draw a point at the equilibrium in the money market. If the interest rate is 5 percent, people will bonds. Bond prices and the interest rate will MD O A. fall; fall O B. rise; fall 29 10 28 Real money (trilions of 2005 dollars) O C. rise; rise O D. fall; rise > Draw only the objects specifed in the question

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter22: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 12P

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The enormous budget deficits of 2009 through 2011 meant that the federal government was borrowing upwards of $1.5 trillion per year. If that borrowing had limited the ability of the private sector to get financial capital for its purposes, economists would call this crowding out. There was O significant evidence this was a problem because interest rates were very high. O little evidence this was a problem because interest rates were very low. O significant evidence this was a problem because interest rates were very low. O little evidence this was a problem because interest rates were very high.
The graph shows the demand for money curve. Draw the supply of money curve if the equilibrium interest rate is 4 percent a year. Label it MS. Draw a point at the equilibrium quantity of money and nominal interest rate. 8- 7- 6- Nominal interest rate (percent per year) 5- 4- 3- ო 2- 1 0+ 3.8 3.9 4.0 4.1 MD ☑ 4.2 Quantity of money (trillions of dollars) >>> Draw only the objects specified in the question.
The graph shows a demand for money curve. Draw a new demand for money curve that shows the effect of an increase in real GDP. Label it MD₁. Draw a demand for money curve that shows the effect of an increase in the number of families that have a credit card. Draw this demand for money curve in relation to the original demand for money curve, MD. Label the new curve MD2. 12- 10- 8- Nominal interest rate (percent per year) 6- 4- 2- 0 2 4 6 8 MD 10 12 ☑ Quantity of money (trillions of dollars) >>> Draw only the objects specified in the question.
In the economy, if the Central Bank rediscount rate, in this case, equality in the economy How will interest and national income change? Draw a graph and explain. Answer this question according to the following three conditions. A) The situation where the interest rate elasticity of the investment is low B) The situation where the interest rate elasticity of the investment is high C) The situation where the interest elasticity of the investment is zero
In the graph you've just explored, is the money market in equilibrium if the interest rate is 4 percent per year? _______. The quantity of money demanded is _______ trillion and the quantity of money supplied is _______ trillion, so there is _______. A. Yes; $10; $10; an equilibrium B. No; $11; $9; an excess demand of $2 trillion C. No; $9; $11; an excess supply of $2 trillion
K The graph shows the demand for money curve. Draw a point to show the interest rate and quantity of money demanded when the interest rate is 5 percent a year. Draw an arrow to show the effect of an increase in the interest rate above 5 percent a year. Label it 1. Draw an arrow to show the effect of a decrease in the interest rate below 5 percent a year. Label it 2. When the interest rate rises, other things remaining the same, the opportunity cost of holding money and A. rises; the demand for money decreases B. falls; the demand for money increases O C. falls; the quantity of money demanded increases OD. rises; the quantity of money demanded decreases 8- 6- 4 2- 0+ Interest rate (percent per year) 2.7 MDO 2.9 3.1 3.3 Real money (trillions of 2007 dollars) >>> Draw only the objects specified in the question. 3.5 € G
When the interest rate falls, how does the opportunity cost of holding money and the quantity of money demanded change? Draw a demand for money curve and label it MD. Nominal interest rate (percent per year) 8- on Heip Draw a point at an interest rate of 5 percent a year. Draw an arrow on the MD curve to show the effect of a rise in the interest rate above 5 percent a year. Label it 1. 7- Draw an arrow on the MD curve to show the effect of a fall in the interest rate below 5 percent a year. Label it 2. 6- When the interest rate falls, other things remaining the same, the opportunity cost of holding money 5- and the 4- O A. falls; quantity of money demanded increases 3- O B. falls; demand for money increases 2- C. rises; demand for money decreases D. rises; quantity of money demanded decreases 1- 2.6 2.7 2.8 2.9 3.0 3.1 3.2 3.3 3.4 Quantity of money (trillions of dollars) >>> Draw only the objects specified in the question. Click the graph, choose a tool in the palette and follow the…
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Interest rate 3 The graph below illustrates the money demand and investment demand for the economies of Pabst and Kokanee. Pabst Kokanee a. If money supply is increased by 25, what will be the new interest rate? Round your answers to one decimal place. Pabst: % Kokanee: % b. What will be the increase in investment spending as a result of this new interest rate? Pabst: Kokanee: c. If the multiplier is 2 in each economy, what will be the increase in GDP? Pabst: Kokanee: d. In which economy would monetary policy be more effective in closing a recessionary gap? PabstKokanee 3 2 1 10 9 8 MD MS 33 Interest rate 2 1 7 6 (110,1.5) 0 70 80 90 100 110 120 10 20 30 40 50 60 70 80 90 100 Quantity of money Quantity of investment MS MD Kokanee Interest rate 3 10 9 8 2 1 70 90 100 110 120 130 0 Quantity of money 10 20 30 40 50 60 70 80 90 100 Quantity of investment
The graph shows the demand for money curve and the supply of money curve. The Fed decreases the quantity of real money supplied to $3.9 trillion. Draw a new MS curve that shows the effect of the Fed's action. Label it. Draw a point at the new equilibrium quantity of money and interest rate. Before the Fed decreases the quantity of money, the equilibrium interest rate is percent a year. After the Fed decreases the quantity of money, at an interest rate of 4 percent a year, people want to hold money than the quantity supplied, so they bonds. A. more; sell B. less; buy C. less; sell D. more; buy The price of a bond A. falls; falls O B. rises; falls and the interest rate 8- 7- 6- 5- 4- 3- 2- 1- Nominal interest rate (percent per year) 4 0+ 3.8 MS 4.0 MD 4.0 4.1 3.9 Quantity of money (trillions of 2009 dollars) >>> Draw only the objects specified in the questi 4.2
36. When a person receives extra income above their regular income, they have an option to save or spend that additional income. The portion of the extra income that is spent can be represented in a figure called: The Marginal Propensity to Consume Savings and Loan Theory The Marginal Propensity to Save The Piggy Bank Theory 37. Economics studies how people use scarce resources to make choices. Those choices can be influenced by: Consumers Incentives The government Taxes 38. What is a problem with nominal GDP when compared to real GDP? it represents past prices and is therefore unreliable it always grossly overstates the output of a nation It can represent deceptive outputs of a nation it has no problems or disadvantages 39. What is a fiscal cliff? A simultaneous increase in tax rates and cuts in government spending A simultaneous decrease in tax rates and cuts in government spending A simultaneous increase in…
The figure shows the demand for money curve. Draw the supply of money curve if the quantity of money is $5.0 trillion. Label it MS. 8- Nominal interest rate (percent per year) Draw a point at the equilibrium quantity of money and nominal interest rate. 7- ☐☐ 6- 5- 4- 3- 2- 1 4.8 4.9 5.0 5.1 MD ☑ 5.2 Quantity of money (trillions of dollars) >>> Draw only the objects specified in the question.