Sppose that the money demand is given by md

Assignment Help Macroeconomics
Reference no: EM13378322

Suppose that the money demand is given by: Md = PY(0.25-i)
Suppose that nominal income is $100 and wealth is $500 and that the money supply is set by the central bank at Ms = 20.
a. Derive the demand for bonds.
b. Draw the supply and the demand of money
c. What is the equilibrium interest rate?
d. What happens to the interest rate if the money supply increases from 20 to 30? Illustrate your answer graphically.
e. What happens to the interest rate if nominal income increases by 10%?
f. If the Federal Reserve Bank wants to increase the interest rate to 12%. At what level should it set the supply of money?

Reference no: EM13378322

Questions Cloud

Suppose we have a data set with only two observations y1 : suppose we have a data set with only two observations y1 and y2. the general formula for the sample average is sample
Kirkland theater sells season tickets for six events at a : kirkland theater sells season tickets for six events at a price of 252. for the 2010 season 1200 season tickets were
What is the amount of 10 equal annual deposits that can : what is the amount of 10 equal annual deposits that can provide five annual withdrawals when a first withdrawal of 3000
Foreman company issued 800000 of 10 20-year bonds on : foreman company issued 800000 of 10 20-year bonds on january 1 2012 at 119.792 to yield 8. interest is payable
Sppose that the money demand is given by md : suppose that the money demand is given by md py0.25-isuppose that nominal income is 100 and wealth is 500 and that the
M ali wants to start rent-a-car business he wants to : mr. ali wants to start rent-a-car business. he wants to start this business with at least 20 cars. he estimates that
Consider a bond that promises to pay 100 in one yeara what : consider a bond that promises to pay 100 in one year.a. what is the interest rate on the bond if its price today is 75?
Matt is a 25 year old engineer and his salary next year : matt is a 25 year old engineer and his salary next year will be 60000. matt expects that his salary will increase at a
On january 1 2010 sycamore co issued 7 5 year bonds with a : on january 1 2010 sycamore co. issued 7 5 year bonds with a face amount of 5 million dollars. the market yield for

Reviews

Write a Review

Macroeconomics Questions & Answers

  What are the responses on the demand side of labor market

When on leave, workers receive 55 percent of their normal pay. What are the likely responses on the demand (employer) side of the labor market? Include in your analysis a consideration of factors that would affect the size of these responses.

  Are textbooks complements or substitutes for air travel

Alexander studies away from home. While at school, he spends all his income on air travel and economics textbooks. In a diagram with air-travel as the x-axis good, as pair increases while ptext remains unchanged, Alexander's price consumption path..

  Elucidate why changes made in supply-demand and price

Locate an article pertaining to a change in the supply, demand, and pricing of a particular product or service. Utilizing the economic theories, prepare a paper in which you summarize the article and elucidate why changes made in supply, demand, a..

  Why the town based on the evidence presented

In this larger geographic market, the firm's market share is low. Therefore, the defense claims, the firm does not have the market power necessary to carry out anticompetitive practices or to make them worthwhile.

  Find the real value of your $40,000 salary for each of the

Suppose you'll have an annual nominal income of $40,000 for each of the next 3 years, and the inflation rate is 4% per year.

  A farmer grows either corn or wheat on her 1057-acre farm

a farmer grows either corn or wheat on her 1057-acre farm. initially the prices of both are equal to 207 per acre

  Is there a parallel among diminishing marginal utility

Is there a parallel among diminishing marginal utility in consumption and diminishing returns in productio.

  What hypothesis testing would you use in the situation

A test classifies applicants as accepted or rejected. On the basis of data on 200 applicants, we test the hypothesis that ad placement success is not related to gender.What hypothesis testing would you use in this situation

  Calculate the proportion to get a desired expected return

If the market has an expected return of 10 percent, a standard deviation of 20% and the risk-free rate is 4 percent, what proportion of your money should be invested in the market if you want an expected return of 16%?

  How the price cut will increase the firms sales and profits

The Haas Corporation's executive vice president circulates a memo to the firm's top management in which he argues for a reduction in the price of the firm's product. He says such a price cut will increase the firm's sales and profits. a. The firm'..

  How will the programs proposed affect future growth

How will the programs proposed affect future growth possibilities for the economy (how will they effect the PPF and long run aggregate supply)?

  Which represents the expected price of the stock in one year

The price of some stock today is $300. Assume that the stock's value in one year is a random variable X with the following probability distribution: P(x=400)=0.1; P(x=350)=0.4; P(x=300)=0.3; P(x=270)=0.2.

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