Money supply change as a result of this single transaction

Assignment Help Business Economics

Reference no: EM131091276

1. Suppose the price level and the value of the dollar in Year 1 are 1.0 and $1.00, respectively.

a. If the price level rises to 1.50 in year 2, what is the new value of the dollar?

b. If instead the price level had fallen to 0.75, what would have been the value of the dollar?

2. Assume that John Nash has $10,000 in his checking account and uses his checking account card to withdraw $150 of cash from the bank’s automated teller machine. By what dollar amount did the M1+ money supply change as a result of this single transaction? Explain.

Reference no: EM131091276

Questions Cloud

Firm that produces chocolate candy bars : Choco Goodness is a firm that produces chocolate candy bars. Which is NOT a short run variable input for this firm? A) Sugar B) Assembly line workers C) The big chocolate-stirring machines D) Packaging materials

Lie between average variable and average total costs : If average variable costs are increasing while average total costs are decreasing, then A) marginal cost must lie between average variable and average total costs. B) marginal cost must equal average variable cost. C) marginal cost must equal average..

Firm that originally sold hotdogs : Dave’s Dogs is a firm that originally sold hotdogs and soft drinks from a cart located in front of City Hall. Then Dave purchased another hotdog cart and hired someone to sell hotdogs and soft drinks near the high school. Both locations have been suc..

Machine part operating in corrosive atmosphere : A low-carbon-steel machine part operating in a corrosive atmosphere, lasts 6 years, and costs $350 to be installed and $50 to be removed at end of life. If the part is treated with corrosion resistance, it will cost $500 to be installed and nothing t..

Money supply change as a result of this single transaction : Suppose the price level and the value of the dollar in Year 1 are 1.0 and $1.00, respectively. If the price level rises to 1.50 in year 2, what is the new value of the dollar? Assume that John Nash has $10,000 in his checking account and uses his che..

How are equilibrium interest rate and level of income : Analyze the effects of a tax cut in an IS-LM model. How does the tax cut shift the IS curve and the LM curve? How are equilibrium interest rate and level of income different from its original level?

Determined by supply and demand : The city of Sundown is considering a plan to build a convention centre to revitalize the downtown area. The project requires hiring workers in the construction union. Because of unionization, the workers’ wage rate is above the value that would be de..

Explain the specific components of project management plan : Describe and explain the specific components of a project management plan. Provide an example from your own experience or observation of a summary level or detailed project management plan and substantiate how that plan was used to managed the projec..

Describe its organizational structure : Select a business you are familiar with. Describe its organizational structure. How are the departments organized? Explain why that organizational structure is a good fit for the business.

User Account

All Pages