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8.Suppose Bank of Canada sells government bonds. Use a graph of the money market to show what this does to the value of money.9.
Using separate graphs, demonstrate what happens to the money supply, money demand, the value of money, and the price level if:a.The Bank of Canada increases the money supply.b.People decide to demand less money at each value of money.
b883f6af08c71e1b8586c907381c893058af8a62.doc310.According to the classical dichotomy, what changes nominal variables? What changes real variables?11.Suppose that monetary neutrality holds. Of the following variables, which ones do not change when the money supply increases?a.Real interest ratesb.Inflationc.The price leveld.Real outpute.Real wagesf.Nominal wages12.Identify each of the following as nominal or real variables.
b883f6af08c71e1b8586c907381c893058af8a62.doc4The unemployment rateThe amount that shows up on your paycheck after taxesThe amount of goods you can purchase with the wage you get each hourThe taxes that you pay the government