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Why is the money supply curve vertical?
The money supply curve is vertical because the central bank has the ability to control the amount of money in circulation by adjusting interest rates and implementing monetary policy. This means that the supply of money is not determined by market forces, but rather by the decisions of the central bank.
What happen to price when supply is constant and demand increaes?
prices will fall if demand decreases and the supply is constant. the supply curve will be vertical and demand curve will be downward sloping.
What is the shape of supply curve during the market period?
The supply curve during the market period is perfectly inelastic and vertical. This shows that the supply cannot be increased in the short run.
What happens to the income multiplier if the aggregate supply curve is vertical?
the multiplier is zero.
Why does the supply curve in the foreign-currency exchange market become vertical in an open economy?
In an open economy, the supply curve in the foreign-currency exchange market becomes vertical because the central bank can adjust the supply of its currency to meet the demand, ensuring stability in the exchange rate.
Why is the money supply curve vertical?
The money supply curve is vertical because the central bank has the ability to control the amount of money in circulation by adjusting interest rates and implementing monetary policy. This means that the supply of money is not determined by market forces, but rather by the decisions of the central bank.
What happen to price when supply is constant and demand increaes?
prices will fall if demand decreases and the supply is constant. the supply curve will be vertical and demand curve will be downward sloping.
What is the shape of supply curve during the market period?
The supply curve during the market period is perfectly inelastic and vertical. This shows that the supply cannot be increased in the short run.
What happens to the income multiplier if the aggregate supply curve is vertical?
the multiplier is zero.
Why does the supply curve in the foreign-currency exchange market become vertical in an open economy?
In an open economy, the supply curve in the foreign-currency exchange market becomes vertical because the central bank can adjust the supply of its currency to meet the demand, ensuring stability in the exchange rate.
Why aggregate supply curve is vertical?
Aggregate supply curve in the long run is vertical. This is because in the long run, wages and other input prices rise and fall to coordinate with the price level. Therefore, price level will not affect how much is supplied.
What are the assumptions underlying the monetary approach to the balance of payments?
1. the absolute Purchasing Power Parity (PPP) theory; 2. a vertical aggregate supply curve; 3. a stable demand for money.
Why is it in macroeconomics demands is downward sloping but supplies is vertical?
Supply is USUALLY upward sloping, the only case (I think) where supply is vertical is when you are talking about the money supply and interest rates. This is because the money supply is set by the Fed, and so does not vary.
What is difference between individual supply curve and market supply curve?
The difference between individual supply curve and the market supply curve is tat individual supply curve is like a firm. To be able to get the market supply curve you have to have the individual supply curve.
What is the difference between horizontal curve and vertical curve vertical curve?
Horizontal curve is a curve viewed in the x and y plane, while a vertical curve is viewed in the y plane only, or viewed from the side. Think of it like a cake. the top is the horizontal and the front is the vertical
Why does the LM curve slope upwards?
In equilibrium: Money supply = Money demand.Summarizing it, we can explain the upward sloping LM curve as following:If income is high then thedemand for money will be high relative to the fixed supply. In order to equilibrate money demand and money supply, interest rates have to also be high to reduce money demand
How is a market supply curve similar to and different from an individual supply curve?
how is a market supply curve similar to and diffrent from an individual supply curve
