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5 - Print name Sign name Econ 520 F 10 Section TA and Hour...

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Print name___________________ Sign name _____________________ Section TA and Hour ___________________________ Econ 520 F 10 Homework 5 11/2, 11/4, due 11/5 1 (10 HW points) Using the Money and Credit model in M&B Chapter 19, what effect will a one-time decrease in the supply of money will have on the equilibrium real interest rate? Assume zero inflationary expectations for simplicity. a) increase b) decrease c) no effect one way or the other 2 (10 HW points) What temporary effect will a one-time decrease in the supply of money have on real interest rates? Assume zero inflationary expectations for simplicity. a) increase b) decrease c) no effect one way or the other 3 (10 HW points) Assuming Adaptive Learning, holding the real interest rate permanently below its equilibrium value requires a) a one-time increase in the money supply b) a one-time decrease in the money supply c) a steady rate of growth in the money supply d) a steady rate of decrease in the money supply e) an accelerating rate of growth in the money supply f) an accelerating rate of decrease in the money supply
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