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Monetary policy will never be effective if interest rates: not respond to a change in the money supply, and investment spending does not respond to changes in the interest rate.
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How does gold investment affects GDP?
Investment in Gold reduces supply of money needed for accelation in economic growth. To that extent that affects growth of GDP.
Can anyone helps to explain the links between changes in the nations money supply the interest rate investment spending aggregate demand and real GDP and the price level?
An increase in the nation's money supply lowers interest rates, thus decreases the cost of doing business. With a higher return on investment, investment spending increases and so too does aggregate supply. As aggregate supply increases, aggregate demand increases and so prices go up. Thus real GDP and APL increase.
What change in monetary policy could eventually cause overborrowing and overinvestment?
a decrease in the money supply
How does a change in discount rate change the money supply?
The Federal Reserve raises the rate in order to encourage banks to lend less.
What can the Fed accomplish by raising or lowering the required reserve ratio?
If they lower the ratio, banks do not have to hold as much cash (which gains no interest), the banks will attempt to loan this money out and make money, this can stimulate investment. Increase or decrease in the money supply (APEX)
How does gold investment affects GDP?
Investment in Gold reduces supply of money needed for accelation in economic growth. To that extent that affects growth of GDP.
Can anyone helps to explain the links between changes in the nations money supply the interest rate investment spending aggregate demand and real GDP and the price level?
An increase in the nation's money supply lowers interest rates, thus decreases the cost of doing business. With a higher return on investment, investment spending increases and so too does aggregate supply. As aggregate supply increases, aggregate demand increases and so prices go up. Thus real GDP and APL increase.
What do monetarist believe?
the change in money supply will affect the price level
What is the best investment nowadays?
To work out the best investment you really have to consider supply and demand. Look at how many people are wanting the "investment" and how many people are selling it. If demand is higher then supply than you have a good investment.
What is the private investment multiplier?
the private investment multiplier is the change in national income resulting from a change in private investment spending
What change in monetary policy could eventually cause overborrowing and overinvestment?
a decrease in the money supply
A risk of money to get something in return is called?
An investment.
How does a change in discount rate change the money supply?
The Federal Reserve raises the rate in order to encourage banks to lend less.
What can the Fed accomplish by raising or lowering the required reserve ratio?
If they lower the ratio, banks do not have to hold as much cash (which gains no interest), the banks will attempt to loan this money out and make money, this can stimulate investment. Increase or decrease in the money supply (APEX)
Supply side economics is based on the theory that if taxes are reduced?
... private investment will increase, producing jobs and incomes.
Money for investment?
Capital
Which of three basic tools used by the Fed to change the money supply is least relied on in practice?
cash
