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Author Question: Explain why one can write the demand for money as the price level times a function of the interest ... (Read 21 times)

saraeharris

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on: Jun 30, 2018
Explain why one can write the demand for money as the price level times a function of the interest rate and real income as follows: = PxL (R, Y)
 
  What will be an ideal response?

Question 2

If the tariff on computers is not changed, but domestic computer producers shift from domestically produced semiconductors to imported components, then the effective rate of protection in the computer industry will
 
  A) increase.
  B) decrease
  C) remain the same.
  D) depend on whether computers are PCs or Supercomputers.
  E) no longer apply.


reelove4eva

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Reply #1 on: Jun 30, 2018
Answer to Question 1

The aggregate money demand is proportional to the price level. Imagine that all prices in an economy doubled, but the interest rate and everyone's real incomes remained unchanged. Then, the money value of each individual's average daily transactions would simply double, as would the amount of money each wishes to hold.

Answer to Question 2

A


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saraeharris

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Reply #2 on: Jun 30, 2018
Thank you :)


reelove4eva

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Reply #3 on: Jun 30, 2018
Happy to help you


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