Explain why velocity of money systematically tends

Assignment Help Business Economics

Reference no: EM131083418

1. Explain why velocity of money systematically tends to increase in periods of robust economic expansion.

2. What is the effect on velocity of money if the following occurs?

a) Banks begin to pay high interest rate on deposits.

b) Great uncertainty is created as the chairperson of the Federal Reserve Board resigns.

3. Assume GDP is currently $14,000 billion per year and the quantity of money is $1,750 billion. What is the velocity of money? The nation collectively holds enough money ti finance how many days worth of GDP expenditure?

Reference no: EM131083418

Questions Cloud

Actors knowingly signed to the terms of the contract : In July 2012, the six adult cast members of the hit TV show Modem family filed a joint law suit against Twenty century fox Television in an attempt to vid their contracts. The lawsuit claimed that their contracts were illegal, in that the contracts b..

Monopolist flexibility to employ nonlinear pricing schemes : We see that monopolist internalize the effect of its production on prices, which leads to a contraction of output. Explain why giving the monopolist flexibility to employ nonlinear pricing schemes can undo this problem?

If the demand for a final product rises : If the demand for a final product rises, then this results in

Great recession-different fiscal and monetary policies : As discussed in the course, the U.S. Economy passed through what has now come to be known as 'The Great Recession'. The government and the Federal Reserve responded with different fiscal and monetary policies. Identify these Monetary and Fiscal polic..

Explain why velocity of money systematically tends : Explain why velocity of money systematically tends to increase in periods of robust economic expansion. What is the effect on velocity of money if the following occurs? Banks begin to pay high interest rate on deposits. Great uncertainty is created a..

The natural rate of unemployment : Suppose short-run output over the next four years is falling and is at the levels of +2%, +1%, 0%, and -1%. According to Okun's law, what unemployment rates should we expect to see in this economy?

Why in this case would the opinion differ than in community : In community A, there is a single beekeeper and a single garden. The bees obtain nectar from the garden but provide no relevant pollination services. The bees, however, are a nuisance to the owner of the garden. The garden owner brings a lawsuit agai..

Discuss it in terms of the effect on government policy : Research the government shutdown using legitimate news and political sources. Describe the effect the government shutdown had on federal services and federal spending. Discuss it in terms of the effect on government policy, the effect on the economy,..

Private equilibrium and socially efficient equilibrium : Suppose a town is interested in providing a public good, crime prevention, to a community. There are two people who live in this community Sam and Sara. Sam's demand curve for crime prevention is given by q(Sam)= 100-2p and Sara's demand for crime pr..

User Account

All Pages