Question

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.”  

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer - In the long run , the increase in the momey supply will affect the level of output and increase the demand in the economy . This increase in demand will shift the price level up. The increase in the output will require more labor to be employed . This will increase the labor demand and hence the wage rates will increase over time

The money neutrality concept states that in the lomg run , money will only affect the nominal variables such as the price level , unemployment and wage rates. The real variables like the consumption levels and the real GDP will not change.

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...
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
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...
1. The aggregate demand would shift to the right if: a. the money supply increases. b....
1. The aggregate demand would shift to the right if: a. the money supply increases. b. the Cambridge “k” increases. c. an increase in government spending is 100% offset by a decrease in consumer spending. d. foreign sector spending falls. e. All of the above. 2. The short run aggregate supply is viewed as upward sloping: a. showing that higher prices will lead to higher production. b. because it takes a while for wages to rise when prices rise. c....
According to classical macroeconomic theory, changes in the money supply affect nominal variables and real variables....
According to classical macroeconomic theory, changes in the money supply affect nominal variables and real variables. nominal variables, but not real variables. real variables, but not nominal variables. neither nominal nor real variables. The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected, production is more profitable and employment rises. production is more profitable and employment falls. production is less profitable and employment rises. production is less profitable and employment falls....
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?
1. i) Let's consider a hypothetical economy where this year's money supply is Tk. 300, nominal...
1. i) Let's consider a hypothetical economy where this year's money supply is Tk. 300, nominal GDP is Tk. 80000 and real GDP is Tk. 2000. a) What does the quantity theory of money say? b) Calculate the price level. c) Calculate the velocity of money d) Show stage b on a graph. ii) Describe briefly the tools the central bank uses to control the money supply in the economy, 3. a) Suppose economists observe that an increase in government...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT