How does this change affect the money demand

Assignment Help Macroeconomics

Reference no: EM133437054

Questions:

I. How does this change affect the money demand?

2. What happens to the velocity of money?

3. If the Central Bank keeps the money supplyr constant1 what will happen to output and prices in the short run and in the long rim? Provide graphical illustration and comment.

4. If the goal ofthe Central Bank is to stabilize the price level, should the Central Bank keep the money.»r supplj.P constant in response to this announcement? If not, what should it do? Why? Provide graphical illustration and comment.

5. If the goal ofthe Central Bank is to stabilize output, how will the answer in part [4] of this question change? Provide graphical illustration and comment.

Reference no: EM133437054

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