An increase in financial frictions shifts the IS curve in which direction?
economics
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Econ 308
Spring 2020
Dr. Butkiewicz
Assignment 9
Money, Inflation and
Aggregate Spending
For problems 1 &
2 below, the base value of the price level, P = 1 (not 100).
- Assume the following:
M = 5000
P
= 2
Y = 10,000
What is V?
= _____________
- Assume the following:
M = 6000
V
= 2
Y = 10,000
What is P?
= _____________
- Assume the following
% Δ M = 4%
% Δ V = 1%
% Δ Y = 3%
What is π? ____________
- Assume the following
% Δ M = 1%
% Δ V = 0%
% Δ Y = 3%
What is π? ____________
- Assume the following
% Δ M = 15%
% Δ V = 3%
% Δ Y = 3%
What is π? ____________
- In the Keynesian theory of
money demand, money held to make every-day purchases is known as the
________________ motive.
- Holding money as an asset
is the __________ motive in the Keynesian money demand theory.
- If real incomes increase
and the money supply is constant, the demand for real balances will
___________ and equilibrium interest rates will ___________.
- If the demand for money is
constant, and the central bank wishes to increase interest rates, it must
________ the money supply.
10. In
a crisis, most assets become riskier. As
a result, the demand for money? _____________
11. Income
after taxes is? _________________________
12. The
amount consumers spend from a dollar of additional income is? _____________
__________________ _____________________
13. The
barrier to efficient operation of financial markets is a? ___________
____________
14. Unplanned
inventory accumulation will result in a _____________ in output.
15. An
increase in real interest rates will reduce? ______ _______ and _______
________.
16. If
Americans decide to purchase more Germen cars, what happens to net exports?
___________
17. A
change in what causes a movement along the IS curve? _____________ ____________
_______________
18. A
government stimulus programs shifts the IS curve to the ______ in an attempt to
_______ aggregate output.
19. A
tax cut shifts the IS curve in which direction? _____________
20. An
increase in financial frictions shifts the IS curve in which direction? ______________
Assignment due May 7[BJ1]
[BJ1]
