Match the following(Theories of Demand for Money): LIST 1 LIST 2 1) Inventory Approach 2) Restatement of quantity theory 3) Classical Approach 4) Keynes Approach 1) 1911 11) 1936 1)1950 IV) 1956 1) II, 2) IV, 3)1,4) II O 1)1, 2) I1, 3) , 4) IV 1) II, 2) II, 3) IV, 4)1 1) IV. 2) I1, 3) 1, 4)
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- 12. Economic models Suppose an economist believes that the price level in the economy is directly related to the money supply, or the amount of money circulating in the economy. The economist proposes the following relationship: P=A×MP=A×M • P=Price LevelP=Price Level • M=Money SupplyM=Money Supply • A=A composite of other factors, including real GDP, that change very slowly over time.A=A composite of other factors, including real GDP, that change very slowly over time. How might an economist gather empirical data to test the proposed relationship between money and the price level? A- An economist would look for data on past changes in the money supply and note the resulting changes in the price level. B- Economists do not usually develop theoretical models of the economy but only analyze summary statistics about the current state of the economy. C- Unlike researchers in the hard sciences, economists cannot study complex relationships using…5-) Question : Variables expressed in terms of are called .. Variables ..... Please select one or more option: a) physcial units / endogenous b) exogenous units / real c) money / nominal d) physical units/ real e) endogenous units / nominal 6-) Question: . implies that an increase in . will increase umw m m a) neutrality of money / inflation / real interest rates b) inflation / prices / both saving and investment c) neutrality of money / the money supply / nominal interest rates d) inflation / prices / real GDP e) neutrality of money / the money supply / real interest ratesAssume the supply of money is fixed by the authorities.(i) Draw the money market diagram under this assumption
- 15) As the price level in the economy falls, which of the following sequence of events occurs? A) Mdf = ↑= IĮ → ADĮ C) Md↑ = ↑= K→ ADĮ B) Mdį = = IĮ = ADĮ D) Mdį = rį =f= AD↑12) Keynesian macroeconomic model with a single-time period lag on the consumption function described is initially equilibrium with the level of investment / = 500 Y₁ = C₁₂ + 1₂ Ct = 750+ 0.5Y-1 a) Determine the equilibrium level of income Y* b) Suppose now the level of investment is increased to I = 650 in one period and reverts to the initial level in subsequent periods. What is the level of income in the period when investment is distributed? Find the time period What is the level of the twelfth period, Yt=12? i. ii.According to the "4-Quadrant Model" (4QM), which of the following statement is correct? O If there is a positive demand shock in the space market, the housing rent is going to increase in the short run, and will be lower than the current rent in the long run. If there is a positive demand shock in the space market, the housing price is going to decrease in the short run, and increase in the long run. If there is a positive demand shock in the asset market, the housing rent is going to decrease in the long run. O If there is a positive demand shock in the asset market, the housing price is going to decrease in the short run, and will be lower than the current price in the long run.
- 14) Detail the workings of the New Keynesian Dynamic Stochastic Equilibrium model.8,Q3) Hey, need help with the following multi-part macroeconomics problem. Thank you in advance! Explain how the equilibrium real interest rate and the equilibrium quantity of credit would change in each of the following scenarios and illustrate your answer with a well-labeled graph of the credit market. As the real estate market recovers from the 2007–2009 financial crisis, households begin to buy more houses and condominiums, and they apply for more mortgages to enable those purchases. Congress agrees to a large tax cut which increases the level of the government deficit. Households begin to fear that a growing pandemic may cause them to lose their jobs and they increase their savings for a rainy day. Businesses become more optimistic about the future of the economy, and decide to distribute more of their earnings as dividends to their shareholders.The figure given below represents the equilibrium real GDP and price level in the aggregate demand and aggregate supply model Figure 8.3 U.S. Price Level B O AD, toAD; O AD, to AD₂ O AD₂ to AD₁ O AS, to AS; AS; to AS₂ 100 200 300 400 AS3 AS₁ AD₂ 500 Real GDP (billions of dollars) AD AS₂ AD3 In Figure 8.3, which of the following shifts would result in stagflation (economic stagnation and inflation)?
- The following equations relate to a certain economy, peruse them and answer thefollowing questions.T = 0.75Y (tax rate)L= Y - 100r (Real money demand)M = 300 (Read money supply)C = 200 + 0.25Y d (Consumption function)I = 20 - 10r (Investment function)G = 30 (government purchases) i) Derive equations fro IS and LM curvesii) Determine the rand y pair at which the two markets are clearing iii) Compute the values of C, I and L.A neoclassical economist and a Keynesian economist are studying the economy of Vineland. It appeals that Vineland is beginning to experience a mild recession with a decrease in aggregate demand. Which of these two economists would likely advocate that the government of Vineland take active measures to reverse this decline in aggregate demand? Why?The U.S. economy is initially in short-run macro-equilibrium. Assume that, in the face of Covid-19, firms’ costs increase as they must comply with safety regulations to keep their employees safe at work. As a result, we observe the following in our economy: Question 31 options: a) Both the price level and real GDP decrease b) The price level increases and real GDP falls c) The price level falls and real GDP increases d) Both the price level and real GDP increase.
