Suppose the liquidity preference function is given by: L.Y)=5 - 1,000 Calculate velocity for each period, using the money demand equation: Y. V= LUY) along with the following table of values. (Round your responses to two decimal places) Period 3 12,350 Period 1 Period 2 Period 4 Period 5 Period 6 Period 7 Y (in billions) 13,300 0.08 12,100 12,400 12,500 12,900 13,200 Interest rate 0.04 0.08 0.03 0.05 0.06 0.04 Velocity 5.17 5.06

Suppose the liquidity preference function is given by: L.Y)=5 - 1,000 Calculate velocity for each period, using the money demand equation: Y. V= LUY) along with the following table of values. (Round your responses to two decimal places) Period 3 12,350 Period 1 Period 2 Period 4 Period 5 Period 6 Period 7 Y (in billions) 13,300 0.08 12,100 12,400 12,500 12,900 13,200 Interest rate 0.04 0.08 0.03 0.05 0.06 0.04 Velocity 5.17 5.06

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

suppose the diffrence between the transaction velocity and the income velocity of circulation of money in an economy is a 5 and the money value of total transaction 6 times the money value of aggregate income . if the quantity of money in circulation is 1000 currency unit , then the money value of aggregate income in currency unit is (a)1000 (b)1200 (c)1500 (D)1800
Explain the micro factors and macro factors which affect the cost of money? What are the conclusions of Beta stability tests and Tests based on the slope of the SML? (hint: refer to Ch 25 in the textbook) Suppose Asset A has an expected return of 10 percent and a standard deviation of 20 percent. Asset B has an expected return of 16 percent and a standard deviation of 40 percent. If the correlation between A and B is 0.35, what are the expected return and standard deviation for a portfolio comprised of 40 percent Asset A and 60 percent Asset B? 1) Calculate what is called Beta, , from the table below (hint : use excel for calculation for beta) and then 2) make the equation with beta and intercept to calculate the expected return of i asset. (hint; use SML equation in Chapter 25 and rRF=5%, M =9% ) Year M i 1 16% 19% 2 -6% -11% 3 12% 17% 4 14% 19% Calculate the expected return of portfolio and standard deviation of portfolio…
In the quantity equation, MV = PY, if velocity is constant, real GDP is growing at 2% per year, and the money supply is increasing at 7% per year, what will inflation be in the long run? Select one: a. 4% per year b. 6% per year c. 7% per year d. 5% per year
(b) Assume that a country’s nominal GDP was measured at $1500 billion in a year and the volume of money (i.e. M1) circulating in the economy the same year was $400 billion. Using the equation of exchange, determine the velocity of money during the year.
Money demand is given by Md/P = 1423 + 0.8Y-1202i Given that P = 173, Y = 2987, and i = 0.15, velocity is equal to (two decimal points) Answer
Suppose the money demand function is ▪ Md/P = 1000+ 0.2Y - 1000 (r + πе). (a) Calculate velocity if Y = 2000, r = .06, and Te = .04. (b) If the money supply (Ms) is 2600, what is the price level? "(c) Now suppose the real interest rate rises to 0.11, but and Ms are unchanged. What happens to velocity, and the price level? So if the hominal interest rate were to rise from 0.10 to 0.15 over the course of a year, with Y remaining at 2000, what would the inflation rate be?
Prove the derivation process that %delta of Money Supply (M) is equal to %delta Price (P) with assuming velocity of money (V) and total transactions (T) are constant.
Based on the projections of the repurchase rate in the extract above.Explain, with the aid of a graph, the impact of a cut in the interest rate on thedemand for money.
The Bangladesh Bank has created additional money worth Tk70,794 crore through various refinance schemes and easing regulatory requirements after the Covid-19 outbreak in March for stimulating demand to revive the declining economy.” (link: https://tbsnews.net/economy/banking/bangladesh-bank-creates-money-worth-over-tk70000cr-revive-economy-76435?fbclid=IwAR108OXKcbXq6JjZj6v9FbULrDtys_QsZySUTKeAmauoqTjppgnLqU89muw#.Xq5kdXhgRqq.facebook). What type of monetary policy is this? Expansionary or contractionary? Draw a diagram to explain your answer
13. Suppose that the money demand function is: (--)ª Use the money demand equation along with the following table of values to find the velocity for each period: ay == - 500i Y (in billions) Interest Rate Period 1 12,000 0.05 Period 2 12,500 0.07 Period 3 12,250 0.03 Period Period 4 5 12,500 12,800 0.05 0.07 Period 6 13,000 0.04 Period 7 13,200 0.06
A Suppose the difference between the transactions velocity and the income velocity of circulation of money in an economy is 5 and the money value of total transactions is 6 times the money value of aggregate income. If the quantity of money in circulation is 1000 currency units, then the money value of aggregate income in currency units is (a) 1000 (b) 1200 (c) 1500 (d) 1800
A standard "money demand" function used by macroeconomists has the form In(m) = Po + B₁In(GDP) + B₂R, Where m is the quantity of (real) money, GDP is the value of (real) gross domestic product, and R is the value of the nominal interest rate measured in percent per year. Supposed that B₁ = 2.32 and B₂ = -0.02. What is the expected change in m if GDP increases by 9%? The value of m is expected to by approximately %. (Round your response to the nearest integer)