If you were to reject the classical dichotomy, then which of the following ideas would you be more likely to reject? (A) Monetary neutrality. (B) Liquidity preferences. (C) The Cantillion effect. (D) Velocity is stable over time.
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. If you were to reject the classical dichotomy, then which of the following ideas would
you be more likely to reject?
(A) Monetary neutrality.
(B) Liquidity preferences.
(C) The Cantillion effect.
(D) Velocity is stable over time.
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- Price stability: Suppose you are the head of the central bank and your mandateis to maintain the price level at a constant value. Explain what you would doto the money supply in response to each of the following events:(a) Real GDP increases by 4% during a boom.(b) Real GDP declines by 1% during a recession.(c) Real GDP is growing at 3% per year.(d) Te velocity of money increases by 2%.(e) Te velocity of money declines by 1%.3. In the case of monetarism, velocity is said to change in a predictable way. What are the three variables that can be used to determine velocity? For each, identify what must happen to these three variables if each of them leads velocity to fall. 4. Discuss the difference between Neoclassical Growth Theory and New Growth Theory. What does the new growth theory emphasize? Ans both.. otherwise dont answer(a) Calculate each of the following for Year 2. Show your work. (i) Real GIDP per capita for Arturia (il) Real GDP per capita for Ringberg (b) If Arturia and Ringberg have the same velocity of money in Year 2, which nation must have the higher money supply in Year 2? Explain (c) Calculate each of the following in Year 2. Show your work. (i) The inflation rate in Arturia (il) The inflation rate in Ringberg (d) Based on your answer to part (c), if the nominal interest rate is the same for both nations in Year 2, which nation experiences the higher real interest rate in Year 2? Explain. (e) Ringberg produces consumer goods and capital goods. While maintaining full employment, Ringberg decides to allocate more resources to the production of consumer goods. What will be the effect on the long-run economic growth rate in Ringberg? Explain. esc C 1 の
- N6 How could Venezuela's inflationary problem be resolved once and for all? Consider and remark on the the following solutions, considering what they involve and how effective they might be. a. A full official dollarization b. Adoption of BitCoin or nother crypto currency such as the Petrolo. c. Legislation mandating a balanced budget approved by the Congress and signed into law by the President.In the New Keynesian model, how should the central bank change its target interest rate in responseto each of the following shocks? Use diagrams, and explain your results.a. There is a shift in money demand.b. Total factor productivity is expected to decrease in the future.c. Total factor productivity decreases in the present.An economy is at full employment. The quantity of money is growing at 8.3 percent a year, the nominal interest rate is 9.5 percent a year, real GDP is growing at 5.0 percent a year, and the inflation rate is 3.1 percent a year. What is the change in the velocity of circulation? Why might it be changing? The velocity of circulation is _______. A. increasing by 3.1 percent a year B. decreasing by 0.2 percent a year C. increasing by 0.2 percent a year D. constant
- a. Examine the fundamental causes of a nation’s business cycle fluctuations. Also, examine the relationship between total spending by government and consumers in a nation and the location of the countries’ GDP on the business cycle. b. 1. Suppose you have $200,000 in a bank term account. You earn 5% interest per annum from this account.You anticipate that the inflation rate will be 4% during the year. However, the actual inflation rate for the year is 6%.Calculate the impact of inflation on the bank term deposit you have and examine the effects of inflation in your city of residence with attention to food and accommodation expenses. 2. The Australian Bureau of Statistics (ABS) reported in May 2017 that the civilian population in Australia over 15 years of age was 20.8 million.Of this population of 20.8 million Australians, 13.5 million were employed and 0.7 million were unemployed.Calculate Australia’s labor force and the number of people in the civilian population who were not in…Suppose a country has a money demand function (M/P)ª = kY, where k is a constant parameter. The money supply grows by 12 percent per year, and real income grows by 4 percent per year. a. What is the average inflation rate? b. How would inflation be different if real income growth were higher? Explain. c. How do you interpret the parameter k? What is its relationship to the velocity of money? d. Suppose, instead of a constant money demand function, the velocity of money in this economy was growing steadily because of financial innovation. How would that affect the inflation rate? Explain.a. Explain why the aggregate short-run aggregate supply curve is upward sloping? b. What is the theory of liquidity preference? c. How does it help to explain the downward slope of the aggregate demand cure?d. Suppose that changes in the bank regulations expand the availability of credit cards so that people need to hold less cash.(i) How does that affect the demand for money? (ii) If the Central Bank does not respond to this event, what will happen to the price level?
- Question: In an economy where the central bank adopts a policy of inflation targeting, what is the most likely impact of a sudden and significant increase in global oil prices? A. A decrease in the central bank's target inflation rate to counteract imported inflation. B. An increase in the central bank's key interest rate to mitigate the risk of rising inflation. C. A commitment to maintaining the current monetary policy stance, disregarding the external price shock. D. An immediate decrease in the key interest rate to stimulate economic growth and offset the negative impact of higher oil prices.A. Draw the baseline long run steady state equilibrium. Suppose this equilibrium existed in September of 2021 B. Suppose the Federal Reserve undertakes expansionary monetary policies after September of 2021. What will happen to the output, employment and price level in the economy in December 2021 (assuming that monetary policies take a few months to show results) ? How will you change your graph in response (you need to show a shift of some curve)? C. Will you let market adjustment work? Show on the graph how market adjustment will affect the economy in May 2022 compared to where the economy was in December 2021?How does high inflation lead to a recession in the country? Explain the role ofthe Government and the Central Bank to address the economic recessionproblem by using appropriate fiscal and monetary policies. Are there anypotential problems with such policies? Please answer in detail and could you please add links off where you got the information.