=================================================== AB 204 Unit 8 Assignment
In Westlandia, the public holds 50 % of money one( M1) in the form of currency, and the required reserve ratio is 20 %.
2. Explain how each of the following changes quantity of money( money supply) in the economy.
3. Assume that in a country the total holdings of banks were as follows:
=================================================== AB 204 Unit 8 Assignment
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1. Long-run Macroeconomic Equilibrium and Stock Market Boom
Let us assume the economy reaches its long-run macroeconomic equilibrium in 2020. When the economy is in the long run macroeconomic equilibrium, the stock market will also reach its boom. This will in turn lead to increases in stock prices more than expected, and the stock prices will stay high for some period.
2) Studies indicate that net exports and net capital outflows tend to be equal.
a) Why do net exports and net capital outflows tend to be equal? How does an increase in the price level change interest rates?