Reference no: EM132471693
In South Korea over the past several years, the real GDP, Y, of has been growing by 3 percent per year and the price level, P, also by 3 percent (that is, DP/P = 0.03 and DY/Y = 0.03). The nominal interest rate, i, has remained constant, the money market has been in equilibrium, and money demand can be represented by Md = kPY/i, where k is a constant parameter. The money market equilibrium implies Ms= kPY/i, where Ms is the money supply. For the purposes of this question, please use the growth form of the equation for the money market equilibrium, DMs/Ms @ DP/P + DY/Y - Di/i, which is a close approximation of the original because the growth rates are small numbers.
(a) At what rate has the South Korean money supply been growing (i.e., what is DMs/Ms)? Please show your calculations.
(b) Suppose this year South Korea's real GDP growth jumps to 4 percent. If rates of growth of the price level and money supply remain the same as in the recent past, what will happen to the nominal interest rate in Korea? Please find the growth rate of the interest rate, and show your calculations.
(c) In question 1(b) when GDP grows at the rate of 4 percent and the price level grows at the rate of 3 percent, if the central bank of South Korea wants to keep the nominal interest rate constant as in the past, at what rate should it increase the money supply? Please show your calculations.
Encourage increased growth of grasslands
: To encourage increased growth of grasslands in the Animal Kingdom, their leader, Simba, is considering a subsidy for production of grasslands.
|
What is the between the short run and the long run
: What is the between the short run and the long run. What will differentiate the short run and the long run?
|
What is the difference between qe and open market operations
: According to the article, how does quantitative easing work? What is the difference between QE and open market operations? What are the limitations of QE?
|
What would the excel formula look like for getting the fv
: Calculate the future value in ten years of $2,000 received today if your investment is 6 percent compounded annually? What would the excel formula look like
|
South korean money supply
: At what rate has the South Korean money supply been growing (i.e., what is DMs/Ms)? Please show your calculations.
|
What value is used to account for complimentary items
: In a hotel owned and operated casino operation, what value ( for accounting purposes) is used to account for complimentary items provided to guests?
|
Limitations of conventional monetary policy tools
: According to the article, what are the reasons why central banks have turned to unconventional monetary policies in the past two decades?
|
CSC1401 Foundation Programming Assignment
: CSC1401 Foundation Programming Assignment Help and Solution - University of Southern Queensland, Australia. Implement the "Days-From-Birth" feature
|
Calculate the tax revenue and excess burden
: Assuming an elasticity of demand of -0.85 and elasticity of supply of 2.5,
|