Homework Week 2

Homework Week 2 - Problem 1 Explain the following questions...

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Problem 1 Explain the following questions only verbally and as concise as possible, but do also emphasize the economic meanings of the different concepts. a) Explain why the money demand curve is downward sloping and what factor(s) cause shifts in the money demand curve. b) Explain by which types of policies a central bank can implement a reduction in the interest rate. c) Explain what effect an increase in real income has on the money market. d) Explain what effect an increase in each of the following variables has on the demand for central bank money: (1) the interest rate, i; and (b) real income, Y. e) What is the money multiplier and what factors determine its size? Problem 2 Year Nom. GDP M i Wealth in $ Velocity of money 1964 648.0 160.3 4.03 1997.2 1974 1458.6 274.3 7.82 4078.9 1984 3777.2 552.1 11.89 11409.6 1994 6736.9 1147.6 6.27 19493.4 a) Calculate the velocity of money for the above 4 years. Comment on the development of the velocity of money. b)
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This note was uploaded on 01/30/2009 for the course ECON 342345 taught by Professor Staff during the Fall '08 term at UCSD.

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Homework Week 2 - Problem 1 Explain the following questions...

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