Increase in the public liquidity preference

Assignment Help Macroeconomics
Reference no: EM131055052

Given the model Y = C + I + G + X - M; with C = a + bYd; Yd=Y-Tx, Tx=Txo;

G = Go; I = f (i...) but investment is NOT a function of income; X = Xo; with import function of M = Mo + mY. Assume a money demand function Md=Mt+Ml, with Mt=f(y) and Ml=f(i), and Ms=Mso. Now assume a significant increase in the public's liquidity preference. This would result in:

  • an increase in the level of income
  • a rightward shift of the LM curve
  • an increase in the level of imports
  • a decrease in the level of saving

Reference no: EM131055052

Questions Cloud

Find the total power radiated into space by the sun : From this, determine the power per unit area arriving at the Earth, 1.5? 1011 m away.
Equivalent annual cost-initial fixed asset investment : A five-year project has an initial fixed asset investment of $260,000, an initial NWC investment of $20,000, and an annual OCF of −$19,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..
Aggregate demand-aggregate supply model : Using the aggregate demand-aggregate supply model, predict what happens in the short run when there is a general decrease in raw materials cost.
One share of stock and one bond : Norma has one share of stock and one bond. The total value of the two securities is 1,416.3 dollars. The stock pays annual dividends. The next dividend is expected to be 5.84 dollars and paid in one year. In two years, the dividend is expected to be ..
Increase in the public liquidity preference : G = Go; I = f (i...) but investment is NOT a function of income; X = Xo; with import function of M = Mo + mY. Assume a money demand function Md=Mt+Ml, with Mt=f(y) and Ml=f(i), and Ms=Mso. Now assume a significant increase in the public's liquid..
What is the expected annual return for stock : Demarius owns investment A and 1 share of stock B. The total value of his holdings is 1,547.71 dollars. Investment A is expected to pay annual cash flows to Demarius of 260 dollars per year with the first annual cash flow expected later today and the..
Military rule and back again exacerbated nigeria : How have the frequent shifts from civilian to military rule and back again exacerbated Nigeria's social and economic problems? What direction do you feel Nigeria should take in the future?
What is the price of the stock expected : Maritza has one share of stock and one bond. The total value of the two securities is 1,138 dollars. The bond has a YTM of 12.04 percent, a coupon rate of 11.46 percent, and a face value of 1,000 dollars; The expected return for the stock is 14.01 pe..
Description of the ultimatum game experiment : Read the description of the ultimatum game experiment in Section 13.6. How would you play if you were a subject in this experiment? What kind of offers would you make?

Reviews

Write a Review

Macroeconomics Questions & Answers

  The company is risk neutral and so maximizes

The company is risk neutral and so maximizes expected profits net of wages.

  Is it an open or closed economy

Identify its comparative advantage and whether it is involved in trade - Identify the country''s type of economy-how its economy is a market, command, or mixed economy.

  What changes should be make in government spending or taxe

If congress and the president decide an expansionary fiscal policy is necessary, what changes should they make in government spending or taxes  what changes should they make if they decide a contractionary fiscal policy is necessary

  Optional strategies to tackle a foreign market

Determine the pros and cons of optional strategies to tackle a foreign market, such as acquisition of a local company, direct investment in production

  What has been the percentage change in price

Consider a 12-year, 12 percent annual coupon bond with a required return of 10 percent. The bond has a face value of $1,000.

  Who wants to buy certain quarter acre of land in housing

Eagle Properties, a real estate investment and sales firm, presents a form contract to its customer Floyd, who wants to buy a certain quarter acre of land in a proposed housing subdivision that Eagle is marketing. Eagle does not pressure Floyd to ..

  Calculating equilibrium price and quantity for monopoly

A Monopolist is deciding how to allocate output between two markets. The two markets are separated geographically. Demand and marginal revenue for the two markets are given by:

  Calculate retailers elasticity of demand for minimum wage

Suppose Congress passes and the President signs a bill raising the federal minimum wage by $1.00 per hour from $7.25 to $8.25. As a result of this increase, a local retailer reduces its hiring of minimum wage employees by 10%.

  What decisions should you make regarding production levels

You know from data collected on the Widget Market that market demand has recently decreased and market supply has recently increased. As manager of the facility, what decisions should you make regarding production levels and pricing for your Widge..

  The multiplier and the marginal propensity to consume will

If in an economy a $150 billion increase in investment spending creates $150 billion of new income int he first round of the multiplier process and $105 billion in the second round, the multiplier and the marginal propensity to consume will be, respe..

  Describe the output level of the firm

Describe the output level of the firm, the number of workers it employs and the profit of the firm.

  Determining merger of two rival firms on market power

When McDonald's Corp. reduced the price of its Big Mac by 75 percent if customers also purchased-Using your knowledge of game theory, what do you thank disrupted McDonald's plans?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd