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sergeinik [125]
4 years ago
15

Consider the portfolio choice theory of money demand. how do you think the demand for money will be affected during a hyperinfla

tion​ (i.e., monthly inflation rates in excess of​ 50%)?
Business
2 answers:
IrinaK [193]4 years ago
8 0

Answer:

Explanation:

During inflation, it is generally known that the demand for a good exceeds its supply, or the demand for a good remains the same, whereas its supply is smothered.

Inflation growing at an accelerated rate is known as hyperinflation.

According to the portfolio choice theory of money demand, the demand for money is affected by inflation risk. Higher fluctuations in the real return of money would arise due to the hyperinflationary environment, this thereby causes the demand for money to decrease.

Instead of holding onto money, people would start investing in other assets, whose real returns are not adversely affected by hyperinflation.

AleksAgata [21]4 years ago
6 0

Answer:

The demand for money decreases sharply.

Explanation:

The portfolio choice and Keynes's theory of demand for money both proposes that as the returns expected on money falls, its demand also falls. When there is an increase in interest rate, it leads to a decrease in the expectation placed on returns on money thus leading to a decrease in demand for money.

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3 years ago
In carrying out market research for a locality, you collect data on income levels, life style characteristics,
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The correct answer is letter D.<span>

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4 years ago
Terrell Trucking Company is in the process of setting its target capital structure. The CFO believes that the optimal debt-to-ca
Semenov [28]

Answer:

a. Terrell's Optimal Capital Structure is 40:60. It means to obtain optimal capital structure in-order to increase value of firm, Terrell should finance 40% of its Assets through Debt and remaining through Common Equity.

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Explanation:

The goal of Management is to increase Shareholders' wealth and not to generate profits because wealth is something that is for long-run whereas Profits are temporary. Management would accept projects having negative NPV if its goal is to maximize Profit.

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Thanks!

4 0
3 years ago
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umka2103 [35]

Answer:

technical support salespeople.

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3 years ago
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