Standard money demand function used by macroeconomists

Assignment Help Business Economics
Reference no: EM131007752

A standard ’money demand’ function used by macroeconomists has the form ln(m) = β0 +β1 ln(GDP)+β2R, where m is the quantity of (real) money, GDP is the value of (real) gross domestic product, and R is the value of the nominal interest rate measured in percent year. Suppose β1 = 1.5 β2 = −0.04. What will happen to m if GDP increases by 1% (R is held constant)? What will happen to m if the interest rate increases from 3% to 4% (GDP is held constant)?

Reference no: EM131007752

Questions Cloud

Portion of his income from his holdings of interest-bearing : Gilberto receives a portion of his income from his holdings of interest-bearing U.S. government bonds. The bonds offer a real interest rate of 4% per year. The nominal interest rate on the bonds adjusts automatically to account for the inflation rate..
Design a new network for western trucking : Western Trucking operates a large fleet of trucks that deliver shipments for commercial shippers such as food stores, retailers, and wholesalers. Design a new network for them, including the specific backbone and LAN technologies to be used
Calculate the unemployment rate by including discouraged : Calculate the official unemployment rate (called “U-3”). Calculate the unemployment rate by including discouraged workers as unemployed and in the labor force (this is called “U-6”). Which unemployment rate is larger?
Do you think it good idea for the ceo to bring gun to work : What questions would her SPHR friend ask Betty Smith? Do you think it is a good idea for the CEO to bring a gun to work? Justify your response. Consider the Second Amendment
Standard money demand function used by macroeconomists : A standard ’money demand’ function used by macroeconomists has the form ln(m) = β0 +β1 ln(GDP)+β2R, where m is the quantity of (real) money, GDP is the value of (real) gross domestic product, and R is the value of the nominal interest rate measured i..
Find the cournot solution for the market price : Two firms, A and B, have complete control of the supply of mineral water and both have zero costs. The market (inverse) demand function is given by: P = 200 – 10Q, where Q = qA (output of seller A) + qB (output of seller B). Find the Cournot solution..
Unstable export markets-worsening terms of trade : Unstable export markets, worsening terms of trade, and limited access to the markets in advanced countries are just a few of the problems that have plagued nations in Africa, Asia, Latin America, and Middle East. For example, developing countries hav..
Explain why scarcity leads to trade-offs : Explain why scarcity leads to trade-offs. What determines the slope of the consumption choice budget constraint? The labor-leisure budget constraint? The intertemporal budget constraint? Does the economic approach specify what choices people should m..
What is the value of information : What is the value of information? How does it affect the viability and competitiveness of nations? Give one specific example of a nation that has accomplished this and how it was achieved

Reviews

Write a Review

Business Economics Questions & Answers

  Which are the relevant costs for the old machine

The present machine can be sold on the open market for $14000. The cost to remove the old machine is $2000. Which are the relevant costs for the old machine?

  The law of supply states that holding all else constant

The law of supply states that, holding all else constant, as the price of a good increases:

  Price elasticity of demand and income elasticity of demand

The demand function for bicycles in Holland has been estimated to be. Where Y is income in thousands of euros, Q is the quantity demanded in units, and P is the price per unit. When P = 150 euros & Y = 15(000) euros, determine the following: Price el..

  How much revenue is lost per unit sale relative to the price

Break out the components of the $28 marginal revenue from the seventh unit sale at $38.31-that is, how much revenue is lost per unit sale relative to the price that would move six shirts per color per day?

  The delphi method used for forecasting

The Delphi method used for forecasting:

  Revenue-sharing in professional sports

Revenue-sharing in professional sports. Assume that there are two grades of professional football players. There are a limited number of “stars,” whom the fans most want to watch, and an unlimited number of “non stars.” There are too few stars to ful..

  What is the break-even unit volume for this product line

Hamsung , Inc., a manufacturer of electronic appliances, estimated the unit cost of one of its products as follows: Material costs $ 63 Labor costs $ 24 Overhead $110 $197 The overhead cost is made up of $50 per unit variable costs and $60 per unit f..

  Compute the marginal and average tax rates

Compute the marginal and average tax rates for three individuals respectively earning $70,000, $93,500 and $200,000 annually.

  Substantial foreign capital-affects the equilibrium wage

There are, on average, 150 new migrants entering Hong Kong from the mainland every day. Use a diagram to explain how this affects the equilibrium wage and quantity of labour in Hong Kong. Substantial foreign capital has been flowing into mainland Chi..

  Services purchased by the government of numidia

Illustrate what is the value of goods and services purchased by the government of Numidia.

  The problem of the commons is the absence of incentives

The problem of the commons is the absence of incentives to

  Unemployment insurance payments

Suppose that inventories fall by $2 billion, consumption increases by $8 billion, unemployment insurance payments decline by $4 billion, and imports rise by $1 billion. By how much should measured GDP change?

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