Why should money demand be dependant on nominal rates

Assignment Help Business Economics
Reference no: EM13977087

We know that investment spending depends on real interest rates, yet the demand for money is dependant on nominal, not real, interest rates. Why should money demand be dependant on nominal rates?

Reference no: EM13977087

Questions Cloud

Taxes and transfers are fixed : Suppose that taxes and transfers are fixed, so that a change in the government’s spending is equivalent to a change in its deficit. The multiplier is three. For each increase in the deficit of 100, interest rates rise by one percentage point. When th..
What will the percentage increase in the money supply be : The money supply is $800 billion, the required reserve ratio is one-sixth, and the simple money multiplier applies to any increases in reserves. The government runs a deficit of $150 billion. What will the percentage increase in the money supply be i..
Is an import tax on industrial goods : A small country imports industrial goods and exports agricultural goods. Both industry and agricultural are perfectly competitive. A new minimum wage law raises wages in industry but not in agriculture. However, all workers displaced from industry as..
How much total utility does the consumer receive : Of the total change in the quantity demanded of X, how much is due to the substitution effect and how much is due to the income effect?
Why should money demand be dependant on nominal rates : We know that investment spending depends on real interest rates, yet the demand for money is dependant on nominal, not real, interest rates. Why should money demand be dependant on nominal rates?
Problem regarding the indian context : What is bench-marking in mutual funds, in the Indian context?
Monetary policy-fiscal policy and supply-side policy : Suppose the US economy is in a recession and in our personal opinion, need to select a single strategy from this list. (monetary policy, fiscal policy, supply-side policy, or laissez faire policy) Which one is best to bring the economy back to full e..
Calculate the price and output for a monopoly : A market has linear market MC (might be supply) and demand curves. No one will buy the good if the price is above $200 and the firm will not produce the good if the price is below $20. Calculate the consumer surplus and producer surplus if this is a ..
Consider the effect of prices on everything doubling : Please consider the effect of prices on everything doubling. Suppose all prices doubled while you slept. A soft drink that sold for a dollar now sells for two dollars; a car that sold for $20,000 now sells for $40,000. The price of labor doubled as w..

Reviews

Write a Review

Business Economics Questions & Answers

  Calculate the profits of these firms in either case

If collusion is not allowed, what kind of market arrangement do you think is likely to result from competitive interactions among these four firms? Calculate the profits of these firms in either case (a and b).

  Occupational segregation is more likely to explain

Occupational segregation is more likely to explain the:

  Find out the demand function

A manufacturer has been selling 1600 television sets a week at 370 dollars each. A market survey indicates that for each 36 dollars rebate offered to the buyer, the number of sets sold will increase by 60 per week. Find out the demand function.

  Write down the budget constraint equation for him

Suppose a person has $20 to spend on music and likes both rap music (R) and country music (C) with a set of preferences so that U=C^1/2R^1/2. Suppose that the iTunes price of a rap music song is PR=2 and the price of a country music song is PC=1. Wri..

  Cost of short-term credit

Fair cross Farms harvests its crops four times annually and receives payment for its crop 90 days after it is picked and shipped. However, planting, irrigating, and harvesting must be done on a nearly continual schedule.

  Illustrate what effect would this have on her dress price

Illustrate what effect would this have on her dress price in the short run, assuming she is following the rules of profit maximizes.

  Derive the firms short-run marginal cost function

A firm has the production function y = x1^1/2 * x2. In the short run it must use exactly 15 units of factor 2. The price of factor 1 is $75 per unit and the price of factor 2 is $2 per unit. Derive the firm’s short-run marginal cost function.

  What is tipping theory

Tipping theory, though not new, is in the news lately, in reference to our "recession" (some say "depression"), and how we can get ourselves out of it, whatever we call it. What is tipping theory? If you've never heard of it, you may research the top..

  What will happen if oil prices remain in the range

According to Global Insight, a Massachusetts economics consultancy, what will happen if oil prices remain in the range of $65 to $70 per barrel for a couple of more months?

  What are the limitations of these graphical representations

Most firms use graphs to present profit and loss information to key stakeholders. What are the limitations of these graphical representations? What ethical concerns must be considered in the preparation and presentation of financial graphs? What shou..

  A business traveler to germany who upon deplaning in berlin

A business traveler to Germany who, upon deplaning in Berlin, uses an airport ATM to withdraw 100 Euros from her U.S. bank would receive which kind of exchange rate?

  What economic policy changes might you expect

Three months ago you purchased, at par, a $100,000 bond with a stated interest rate of 5%. Today, the Federal Reserve announced

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd