Question

present an analysis where you examine the long term impact of an increase in the money...

present an analysis where you examine the long term impact of an increase in the money supply. use your analysis to explain why increases in the money supply may explain the observed changes in both product prices and nominal wage levels over time. also, use your analysis to explain (using words) what it means when macroeconomists say money is neutral

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer - The increase in the money supply in the long run will increase the value of AD in the economy. This increased demand will shift the AD towards right and will increase the price level in the economy . The output will also increase. The increase in output will demand more labor. Because if this , the wages in the market will also increase.

The money neutrality concept states that the money affects only the nominal variables such as the price level , output and the exchange rate. It is not able to influence the real consumption and real GDP. Hence the money is neutral.

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
Present an analysis where you examine the long term impact of an increase in the money...
Present an analysis where you examine the long term impact of an increase in the money supply. Use your analysis to explain why increases in the money supply may explain the observed changes in both product prices and nominal wage levels over time. Also, uses your analysis to explain (using words) what it means when macroeconomists say “money is neutral.”
Present an analysis where you examine the long-term impact of an increase in the money supply....
Present an analysis where you examine the long-term impact of an increase in the money supply. Use your analysis to explain why increases in the money supply may explain the observed changes in both product prices and nominal wage levels over time. Also, uses your analysis to explain (using words) what it means when macroeconomists say “money is neutral.”  
Present an analysis that explains why the growth of the nation's money supply might well be...
Present an analysis that explains why the growth of the nation's money supply might well be responsible for both the inflation we have observed but also responsible for some of the increases in the nominal wage level we have observed.
Explain using words why, under Wicksell’s Theory, an increase in the money supply has no long...
Explain using words why, under Wicksell’s Theory, an increase in the money supply has no long term effect on interest rates or the levels of savings and investment in the economy. List at least 6 fundamental changes in the economy which might alter the neutral rate.
when money supply increase permanently in a large open economy, what happens to the long term...
when money supply increase permanently in a large open economy, what happens to the long term nominal interest rate? a, long term nominal interest rate increase b, long term nominal interest rate decrease c, long term nominal interest rate unchanged d, long term nominal interest rate may increase or decrease
73. Both a pre-requisite and a co-requisite to long-term economic growth is: (a) contraction of the...
73. Both a pre-requisite and a co-requisite to long-term economic growth is: (a) contraction of the money supply; (b) rising expectations for business earnings; (c) a marginal propensity to consume close to zero; (d) a balanced federal budget. 74. Perhaps the most fundamental relationship in all of economics is which of the following? (a) spin rates and curve balls; (b) human capital accumulation and the performance of the VIX index; (c) real disposable income and personal consumption expenditures; (d) money...
You have been offered a very long-term investment opportunity to increase your money one hundredfold. You...
You have been offered a very long-term investment opportunity to increase your money one hundredfold. You can invest $800 today and expect to receive $80,000 in 40 years. Your cost of capital for this (very risky) opportunity is 23%. What does the IRR rule say about whether the investment should be undertaken? What about the NPV rule? Do they agree? What is the IRR?
Ch 7 You have been offered a very​ long-term investment opportunity to increase your money one...
Ch 7 You have been offered a very​ long-term investment opportunity to increase your money one hundredfold. You can invest $ 1,000 today and expect to receive $ 100,000 in 40 years. Your cost of capital for this​ (very risky) opportunity is 25 %. What does the IRR rule say about whether the investment should be​ undertaken? What about the NPV​ rule? Do they​ agree? What is the IRR​? The IRR of this investment opportunity is _______%
1. Assume that you received a 3 percent increase in your normal wage. Over the year,...
1. Assume that you received a 3 percent increase in your normal wage. Over the year, inflation ran about 2.1 percent. Which of the following is true? a) Your real wage increased. b) Although your nominal wage rose, your real wage decreased c) Both your nominal and real wages decreased d) your nominal wage decreased 2. There are many measures of changes in price levels. which one of the following is the broadest measure of inflation? a) the GDP Chain...
You have been offered a very long-term investment opportunity to increase your money one hundredfold. You...
You have been offered a very long-term investment opportunity to increase your money one hundredfold. You can invest $1,700 today and expect to $170,000 receive in 40 years. Your cost of capital for this (very risky) opportunity is 25% . What does the IRR rule say about whether the investment should be undertaken? What about the NPV rule? Do they agree? The IRR of this investment is ;  (round to one decimal place. i.e. write "12.34%" as "12.3%".) According to IRR...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT