1. 5.00%/5.25%/5.50%/5.75%/6.00% 2. 5.00%/5.25%/5.50%/5.75%/6.00% 3. increase/de
ID: 1123395 • Letter: 1
Question
1. 5.00%/5.25%/5.50%/5.75%/6.00%
2. 5.00%/5.25%/5.50%/5.75%/6.00%
3. increase/decrease
4. 0.8 trillion/0.9 trillion/1.0 trillion/1.1 trillion/1.2 trillion/1.3 trillion
6. Targeting the interest rate Aa Aa The following graph shows the demand for money in 2012 and the projected demand for money in 2013. Suppose there is just one interest rate in the economy. INTEREST RATE (Percent) 6.75 6.50 6.25 No hterventio Money Supply New MS Curve 6.00 With Intervention 5.75 Mone Deman 2013 5.50 5.25 Money Demand 2012 5.00 4.75 0.7 0.8 0.9 .0 1.1 1.2 1.3 4 1.5 MONEY [Trillions of dollars) Help Clear All | The initial equilibrium interest rate in 2012 was to alter the money supply between 2012 and 2013. Use the red point (cross symbol) to illustrate the equilibrium interest rate and quantity of money that would result from this lack of intervention. A dashed drop line will automatically extend to the Y-axis. In this scenario, the equilibrium interest rate in 2013 would be Suppose the Federal Reserve (the Fed) chooses not Suppose the ed wanted to keep 2013 interest rates at their 2012 level. To do this, it would need to the money supply to a new level of Place the green line (triangle symbols) on the graph to indicate the new money supply curve if the Fed were to follow this policy, and place the black point (X symbol) to indicate the resulting equilibrium interest rate and quantity of money. A dashed line will automatically extend to the Y-axis It was assumed so far that there was only one interest rate in the economy. The real-world economy has manyExplanation / Answer
1) 5.50% . This is the point where initial money demand (2012) intersects the money supply curve.
2)
3) decrease
4) 1.0 trillion
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.