Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Microeconomics Expert

When the real interest rate increases, banks have an incentive to lend a greater portion of their deposits, which reduces the reserve-deposit ratio. In particular,suppose that res =0.4 - 2r,where res is the reserve-deposit ratio and r is the real interest rate. The currency-deposit ratio is 0.4, the price level is fixed at 1.0, and the monetary base is 60. The real quantity of money demanded is L(Y, i) = 0.5Y -10i, where Y is real output and i is the nominal interest rate. Assume that expected inflation is zero so that the nominal interest rate and the real interest rate are equal.

a. If r =i =0.10, what are the reserve-deposit ratio,the money multiplier, and the money supply? For what real output Y does a real interest rate of 0.10 clear the asset market?

b. Repeat part (a) for r =i = 0.05.

c. Suppose that the reserve-deposit ratio is fixed at the at the value you found in part (a) and is not affected by interest rates. If r = i = 0.05, for what output Y does the asset market clear in this case?

d. Is the LM curve flatter or steeper when the reserve-deposit ratio depends on the real interest rate than when the reserve-deposit ratio is fixed? describe your answer in economic terms.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M938639

Have any Question? 


Related Questions in Microeconomics

Question 1which of the following has not been identified as

Question 1 Which of the following has NOT been identified as a basic consumer right? Consumers have a right to safe products. Consumers have a right to collude. Consumers have a right to be informed about a product. Cons ...

Discussion questionplease read thoroughly and provide

Discussion Question Please read thoroughly and provide references • Manufactures of smartphones design products to be interactive with consumers. To remain competitive, designers are focused on getting a new product to m ...

Assignmentioverview provide an overview consisting of a

Assignment I. Overview: Provide an overview consisting of a brief description of the chosen company, your chosen product or service, and annual sales. II. Macroeconomic Variables For this section, you will utilize macroe ...

Microeconomics assignmentdiscussion forumnote the video has

Microeconomics Assignment DISCUSSION Forum Note: The video has Closed Captioning. To activate it, start the video, mouse over the bottom of the video and click on the CC icon, then select from the menu. This week's discu ...

Assignment money and pricethe organizations strategic plan

Assignment: Money and Price The organization's strategic plan you wrote about calls for an aggressive growth plan, requiring investment in facilities and equipment, growth in productivity, and labor over the next five ye ...

Assignmentlearning objectives covered1explain 3 ways the

Assignment Learning Objectives Covered: 1. Explain 3 ways the statement of goals, application of rewards, and institution of discipline affect and motivate ethical behavior in individuals 2. Demonstrate how roles and aut ...

Assignmentin the article at the beginning of the readings

Assignment In the article at the beginning of the readings book, Aronson talks about Social Psychology as a leap of faith, and about the imperfect nature of social psychological experiments (which is true of science in a ...

Assignmentthe paper is to be a properly formatted apa paper

Assignment The paper is to be a properly formatted (APA) paper that I expect will take at least 5 pages to do properly. It is to take the material discussed in the course and apply it to some issue or observation in your ...

Milestone projectmilestone one propose organization for

Milestone Project Milestone One: Propose Organization for Analysis In Module Three, you will select the organization you would like to analyze in part two of the final project using the U.S. Securities and Exchange Commi ...

Assignment-money and pricesjaydeethe organizations

Assignment-Money and Prices Jaydee The organization's strategic plan you wrote about in Week 2 calls for an aggressive growth plan, requiring investment in facilities and equipment, growth in productivity, and labor over ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen