Advanced Placement (AP) College

Ap Macro
The banking system in Country A has limited reserves, and the central bank of Country A has become concerned about a steep decline in investment spending.

(a) Identify an open market operation that Country A’s central bank is likely to implement to address the decline in investment spending.

(b) Draw a correctly labeled graph of the money market and show the effect of the central bank’s policy identified in part (a) on the nominal interest rate.

(c) Explain the effect of the change in the nominal interest rate shown in part (b) on aggregate demand in the short run.

(d) If the banking system in Country A instead had ample reserves rather than limited reserves, identify a policy action the central bank is likely to implement to address the decline in investment spending.

Answers

Answer 1

(a)Country A's central bank is likely to carry out an open market purchase procedure to abate the dive in investment expenditure.

What is the market graph?

(b)The money market graph would demonstrate growth in the money supply, relocating the demand curve for currency to the right, lessening the nominal interest rate.

(c)Diminishing the nominal interest rate would fuel up investment spending, generating aggregate demand to surge in the short term.

(d)In case that the banking system had sufficient reserves, the central bank may reduce the reserve necessity for banks, loosening additional funds for loaning and spurring investment expendiure.

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Related Questions

How does the Ugu District use various channels to communicate and spread its mission to members of the community, both on a local and non-local scale?​

Answers

Attached as a PDF file

What we consider a market has evolved over time, from an actual physical marketplace, such as a farmers market, to large stores and to Internet marketplaces such as eBay.

1.Discuss the main components necessary for a market to occur.

2.Discuss a market you have recently participated in, either professionally or personally. Why is it important for you to take part in this market, and what differentiates it from other markets?

Answers

Answer:

The concept of a market has evolved over time, from the traditional physical marketplace to large stores and now to online marketplaces. A market is a platform that brings together buyers and sellers to exchange goods or services at an agreed price. The main components necessary for a market to occur include:

1. Buyers and Sellers: A market cannot exist without buyers and sellers. Buyers are individuals or organizations that require goods or services, while sellers are individuals or organizations that offer goods or services for sale.

2. Products or Services: A market requires products or services that buyers are willing to purchase and sellers are willing to sell. These products or services can be physical goods like groceries or digital services like software development.

3. Price: The price of a product or service is the amount of money that buyers are willing to pay and sellers are willing to accept in exchange for the product or service.

4. Communication: Communication is essential in a market as it allows buyers and sellers to interact with each other, negotiate prices, and exchange information about products or services.

5. Rules and Regulations: Markets require rules and regulations to ensure fair trade practices, protect consumers, and prevent fraud.

One market that I have recently participated in is the stock market. As an investor, it is important for me to take part in this market as it provides an opportunity to invest my money in companies that I believe will grow over time. The stock market is different from other markets as it involves buying and selling shares of ownership in publicly traded companies rather than physical goods or services. The price of these shares fluctuates based on supply and demand, company performance, and economic conditions.

Before taking a typing course a candidate could type 16 words per minute. By the end of the course, the candidate was able to type 38 words per minute. Find the percent increase

Answers

Answer:

137.5%

Explanation:

V1 = speed of typing before joining the course = 16 words per minute.

V2 = speed of typing after end of the course = 38 words per minute.

The percentage increase in the typing speed is:

= ( V2 - V1 )/ V1 multiple by 100

= ( 38 - 16 )/ 16 multiple by 100

= 11/8 * 100

= 275/2

= 137.5%

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