Question

Which of these variables is not a variable in the equation for the asset market equilibrium...

Which of these variables is not a variable in the equation for the asset market equilibrium condition?

A.Saving

B. Real interest rate

C. Expected rate of inflation

D. Real income

SIDE NOTE: I put C and got it wrong

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Asset market equilibrium shows the equilibrium between demand and supply of assets.

The asset market equilibrium is given by:

M/P = Md/P = L(Y , r+πe)

where, M = nominal money supply

P = price

Y = real income

r = real interest rate

πe = expected rate of inflation

Thus, real interest rate, expected rate of inflation, and real income are a variable in the equation for the asset market equilibrium condition. Savings is not a part of the asset market equilibrium.

So, the answer is (A) savings.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
QUESTION 19 In an economy with MPC = 0.8, and according to the goods market equilibrium...
QUESTION 19 In an economy with MPC = 0.8, and according to the goods market equilibrium equation in the IS-LM model, to increase (equilibrium) total output, Y, by 8, the government can: A. cut/lower the level of taxation, T, by 1. B. cut/lower the level of taxation, T, by 2. C. increase the level of taxation, T, by 2. D. none of the above. 10 points    QUESTION 20 Every point on an IS curve represents: A. a combination of...
A. Give the equation of exchange. For each variable in the equation, explain or define it...
A. Give the equation of exchange. For each variable in the equation, explain or define it briefly. B. Since 2007 (quant. easing), many non-Keynesian economists (Classical) have been predicting a rapid increase in the inflation rate. Why? Use the equation in your answer. C. Why do Keynesian economists believe increasing the money supply is a good idea? Use the equation in your answer. D. Use the equation to explain or illustrate “Friedman’s Rule.” E. John Taylor had an opinion about...
A. Give the equation of exchange.  For each variable in the equation, explain or define it briefly....
A. Give the equation of exchange.  For each variable in the equation, explain or define it briefly. B. Since 2007 (quant. easing), many non-Keynesian economists (Classical) have been predicting a rapid increase in the inflation rate.  Why?  Use the equation in your answer. C. Why do Keynesian economists believe increasing the money supply is a good idea?  Use the equation in your answer. D.  Use the equation to explain or illustrate “Friedman’s Rule.” E. John Taylor had an opinion about one of the variables in...
C= 0.8(1-t)Y,r=0.25,I=900-50r,G=900,L=0.25Y-62.5r and m/p=500 (money market equilibrium)r=interest rate a) what is the equation that describes the...
C= 0.8(1-t)Y,r=0.25,I=900-50r,G=900,L=0.25Y-62.5r and m/p=500 (money market equilibrium)r=interest rate a) what is the equation that describes the IS curve b) define IS curve c) define LM curve d) calculate equilibrium levels of income Y and interest rate r
Md=100-10r+0.5Y Md=Money demand r= interest rate Y= real income a. In the money demand equation why...
Md=100-10r+0.5Y Md=Money demand r= interest rate Y= real income a. In the money demand equation why is the sign of interest rate is negative and the sign of real income is positive, explain. b. If real income is 800 billion TL and interest rate is %10 what is the quantity of money demand? c. If equilibrium interest rate is %5 and real income is constant (Y=800 billion TL) what is the quantity of money supply? d. Draw the money market...
Suppose the inverse demand equation for taxi is P = 100 − 2Q and the inverse...
Suppose the inverse demand equation for taxi is P = 100 − 2Q and the inverse supply equation is P = 2Q. Suppose there’s a policy that restricts the price to be at least $65. Which of the following statements is correct? A. The market equilibrium price will be 70. B. There will be no excess demand or excess supply. C. There will be an excess demand of 15 units. D. There will be an excess supply of 15 units....
A. Give the equation of exchange.  For each variable in the equation, explain or define it briefly....
A. Give the equation of exchange.  For each variable in the equation, explain or define it briefly. B. Since 2007 (quant. easing), many non-Keynesian economists (Classical) have been predicting a rapid increase in the inflation rate.  Why?  Use the equation in your answer. C. Why do Keynesian economists believe increasing the money supply is a good idea?  Use the equation in your answer. D.  Use the equation to explain or illustrate “Friedman’s Rule.” E. John Taylor had an opinion about one of the variables in...
54. In which market would a bank with excess reserves attempt to sell reserves to a...
54. In which market would a bank with excess reserves attempt to sell reserves to a bank with insufficient reserves? (a) Treasury bill market? (b) federal funds market; (c) bond market; (d) NASDAQ. 55. When compared with monetarist theory, Keynesian theory places greater emphasis on: (a) changes in supply of money as a determinant of GDP and inflation; (b) totally discounts the role of monetary policy in determining GDP and inflation; (c) fiscal policy as a determinant of money supply...
The short-run equilibrium in the output market is achieved when the value of income from production...
The short-run equilibrium in the output market is achieved when the value of income from production (output) Y equals the value of aggregate demand D, which is a function of the real exchange rate, disposable income, investment expenditure and government purchases, i.e., Y = D(EP*/P, Y-T, I, G). The DD schedule shows combinations of output and exchange rate at which the output market is in short-run equilibrium. a) Why does the DD schedule slope upward? b) List the factors which...
1). Suppose in Pakistan the macroeconomic variables i* (foreign interest rate), P (domestic aggregate price level),...
1). Suppose in Pakistan the macroeconomic variables i* (foreign interest rate), P (domestic aggregate price level), P* (foreign aggregate price level), Y* (foreign income level), straight pie (domestic expected inflation), T (domestic net taxes), and G (domestic government spending) are exogenously given, the interest parity condition holds, and the expectations of the future economic trends remain unchanged. In this situation, if the foreign aggregate price level, P*, declines, the IS curve a. would not shift. b. would shift to the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT