0
Want this question answered?
Be notified when an answer is posted
Add your answer:
Earn +20 pts
Will increase in nominal money supply increase real money supply?
No because real money supply would only increase if the price level doesnt increase or increases at a slower pace than the increase in nominal money supply. This is because the real money supply takes into account the current price level.
What is the velocity of money if the nominal interest rate is constant?
If the nominal interest rate is constant, then PY is constant in the equation PY = MV, so V will remain constant so long as money supply does not change.
What happens to money demand as nominal income increases?
If a Central Bank follows the Taylor Rule, it will modify the interest rate, and therefore affecting the money supply if basically one or both of things happen:The inflation rate is bigger than the target, that is, the level of inflation that CB want to maintain.The actual output is bigger than the potential output.So if nominal income increases, this may not imply a change in the money supply, but if aggregate income outweigh potential income, inflation pressures would appear, and the CB would reduce money supply to cool down the economy.Summarising, if nominal income grows faster, there will be a reduction in money supply.
Why does aggregate demand go up when money supply increases?
It doesn't. Money supply has no effect on aggregate demand. Aggregate demand is only effected by the buying power of money, real interest rate, and the real prices of exports and imports. If the supply of money goes up it only causes a short term decrease in the nominal interest rate. The price level is not accompanied by a decrease in the supply of money so the real interest rate does not rise.
If the Federal Reserve increases the reserve requirement and velocity remains stable What will happen to nominal GDP and why?
A significant increase in reserve requirements will reduce the lending of member banks resulting in a relatively smaller supply of M2 money. Money can bought and sold repeatedly by each stock speculator throughout the day. Just look at the volume netted and cleared by stock speculators on a daily basis. Therefore velocity has no obvious unambiguous meaning outside of something like nominal GDP divided by money supply. Therefore by this definition a decrease in money supply must be countered with a decrease in GDP to keep velocity stable.
Will increase in nominal money supply increase real money supply?
No because real money supply would only increase if the price level doesnt increase or increases at a slower pace than the increase in nominal money supply. This is because the real money supply takes into account the current price level.
What is the velocity of money if the nominal interest rate is constant?
If the nominal interest rate is constant, then PY is constant in the equation PY = MV, so V will remain constant so long as money supply does not change.
Calculate the velocity of money when nominal gross domestic product GDP is 1 trillion and the money supply is 250 billion?
Gross Domestic Product divided by the value of the money supply 1,000,000,000,000 divided by 250,000,000,000 = 4.
What happens to money demand as nominal income increases?
If a Central Bank follows the Taylor Rule, it will modify the interest rate, and therefore affecting the money supply if basically one or both of things happen:The inflation rate is bigger than the target, that is, the level of inflation that CB want to maintain.The actual output is bigger than the potential output.So if nominal income increases, this may not imply a change in the money supply, but if aggregate income outweigh potential income, inflation pressures would appear, and the CB would reduce money supply to cool down the economy.Summarising, if nominal income grows faster, there will be a reduction in money supply.
Why does aggregate demand go up when money supply increases?
It doesn't. Money supply has no effect on aggregate demand. Aggregate demand is only effected by the buying power of money, real interest rate, and the real prices of exports and imports. If the supply of money goes up it only causes a short term decrease in the nominal interest rate. The price level is not accompanied by a decrease in the supply of money so the real interest rate does not rise.
What is are the differences between Friedman's quantity theory of money and that of Irving fisher's?
Friedman's quantity theory of money focuses on long-run changes in money supply and its relationship with nominal income. Fisher's quantity theory expands on this to account for both short-run and long-run changes in money supply and velocity of money. Fisher also incorporates the concept of the equation of exchange to explain the relationship between money supply, velocity, price level, and real income.
If the Federal Reserve increases the reserve requirement and velocity remains stable What will happen to nominal GDP and why?
A significant increase in reserve requirements will reduce the lending of member banks resulting in a relatively smaller supply of M2 money. Money can bought and sold repeatedly by each stock speculator throughout the day. Just look at the volume netted and cleared by stock speculators on a daily basis. Therefore velocity has no obvious unambiguous meaning outside of something like nominal GDP divided by money supply. Therefore by this definition a decrease in money supply must be countered with a decrease in GDP to keep velocity stable.
Use nominal in a sentence?
The nominal fee for admission to the museum was five dollars.
What is single phase supply for domestic uses in kv?
.230kvAnswerThe nominal supply voltage to a residence depends on the national electrical standards in the country in which you live, but no residential single-phase supply exist in the kilovolt range. European countries have a standard nominal voltage of 230 V (which you could express as 0.230 kV, if you really wanted to!) and the US and Canada have a nominal 240/120 V supply voltage.And the correct symbol for kilovolts is 'kV', not'kv'.
Why do changes in money supply not affect GNP?
According to the Federal Reserve the money supply consists of safe liquid assets such as U.S. currency, checking, and savings accounts that businesses and households can use to pay bills or purchase items. The money supply can be measured in different ways depending on which monetary aggregates are included in the calculation. A large increase in the money supply has been linked to an increase in the price level and growth in nominal gross domestic product which is not price adjusted for inflation. Changes in the money supply have not had a close correlation to changes in gross domestic product over the past several decades which is why the Federal Reserve has diminished the importance of changes in the money supply as it relates to conducting monetary policy.
What is the difference between nominal and ppp GDP?
idk.weeoll is money.
Opportunity cost of holding money?
The opportunity cost of holding money is the nominal interest rate.
