Suppose that the household nominal income for a country is 50.000 billion. The money demand function...
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Suppose that the household nominal income for a country is €50.000 billion. The money demand function is given by Md¹= €Y(0.2-0.81) a. What is the demand for money when the interest rate is 1%? 5%? b. What is the relationship between money demand and income? Money demand and the interest rate? c. Suppose the yearly income is reduced by 20%. In percent- age terms, what happens to the demand for money if the interest rate is 1%? If the interest rate is 5%? d. What should a central bank do to interest rates if it needs to increase money demand? Suppose that the household nominal income for a country is €50.000 billion. The money demand function is given by Md¹= €Y(0.2-0.81) a. What is the demand for money when the interest rate is 1%? 5%? b. What is the relationship between money demand and income? Money demand and the interest rate? c. Suppose the yearly income is reduced by 20%. In percent- age terms, what happens to the demand for money if the interest rate is 1%? If the interest rate is 5%? d. What should a central bank do to interest rates if it needs to increase money demand?
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to 11 M 50000 02 08 001 binion far 96000 57 Md 50000 0268 05 8000 binion The relation be... View the full answer
Related Book For
Introduction to Business Law
ISBN: 9780324826999
3rd Edition
Authors: Jeff rey F. Beatty, Susan S. Samuelson
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