I need help with these questions In order to reduce the nominal interest rate, the central bank:reduces the money supplyraises the money demandreduces the money demandraises the money supply The opportunity cost of holding money (what households are givingup by holding their wealth in the form of money instead of otherassets) is:the real interest ratethe inflation ratethe nominal interest rateminus the inflation rate

"As there are two different questions, so answer is provided to the first question." "Money demand…

Answered: In order to reduce the nominal interest…

In order to reduce the nominal interest rate, the central bank: reduces the money supply raises the money demand reduces the money demand raises the money supply

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter14: Money And The Economy

Section: Chapter Questions

Problem 5QP

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Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

Question

I need help with these questions

In order to reduce the nominal interest rate, the central bank:
reduces the money supply
raises the money demand
reduces the money demand
raises the money supply

The opportunity cost of holding money (what households are giving
up by holding their wealth in the form of money instead of other
assets) is:
the real interest rate
the inflation rate
the nominal interest rate
minus the inflation rate

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