=================================================== 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 ?