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nignag [31]
3 years ago
8

Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and de

crease the money supply when the price level rises. If the economy starts from long-run equilibrium and aggregate demand shifts right, the central bank must:___________
a) decrease the money supply so interest rates rise.
b) increase the money supply so interest rates fall.
c) decrease the money supply do interest rates fall
d) increase the money supply so interest rates rise.

Business
2 answers:
Ann [662]3 years ago
6 0

Answer:

A). Decrease the money supply so interest rates rise.

Explanation:

This could be explained simply because change in money supply results in changes in price levels and/or a change in supply of goods and services. An increase in money supply results in a decrease in the value of money because an increase in money supply causes a rise in inflation. As inflation rises, the purchasing power, or the value of money, decreases.

A change in interest rates is one way to make that correspondence happen. A fall in interest rates increases the amount of money people wish to hold, while a rise in interest rates decreases that amount. A change in prices is another way to make the money supply equal the amount demanded.

Ostrovityanka [42]3 years ago
6 0

Answer:

Explanation:

Aggregate demand is the total demand for a commodity in an economy. In this case it is demand for money.

As illustrated bin the attached diagram, when there is a shift of aggregate demand to the right there will be an increase in price and equillibrum quantity increases.

When price increases the central bank will increase money supply.

As a result of excess money in the economy the cost of borrowing money (interest) will reduce.

This is because money is now readily available, so borrowers will be willing to pay less interest.

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Answer:

161 units

Explanation:

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annual demand = 500 units

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holding cost = $550 x 7% = $38.50

EOQ = √[(2 x 500 x $1,000) / $38.50] = 161.16 units ≈ 161 units

7 0
3 years ago
2. If information is disseminated, what happens to it?
Molodets [167]

Answer:

b

Explanation:

by definition, disseminate means to distribute or broadcast information

4 0
3 years ago
Determine how the following scenarios affect the firm's cash position. Identify whether the scenario describes a financing, inve
pochemuha

Answer and Explanation:

The classification is as follows:

1. Dividend of preferred stock paid - Financing activity

2. Purchase of the property for a future factory - Investing activity

3. Issuance of the common stock shares  -  Financing activity

4.Rise in  accrued liabilities - Operating activity

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The following are expected to increase in the cash flow

1.  Issuance of the common stock shares

2. Rise in  accrued liabilities

3. Sell some old equipment

Increase inventory holdings - Operating activity

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4 0
3 years ago
How much is a $2 dollar bill worth
seraphim [82]
A $2 bill is worth 200 pennies, 20 dimes, 4 half dollars, and  25 nickels.


Hope this helps :)
5 0
3 years ago
Read 2 more answers
During the year, Cheng Company paid salaries of $24,000. In addition, $8,000 in salaries has accrued by the end of the year but
Burka [1]

Answer:

Correct answer is D. Credit to Salaries Payable for $8,000

Explanation:

Based on the basic underlying guideliness in accounting, specifically matching principle. All income and expenses should be reported during the period it incurred. Thus, all expenses incurred during the period even though it wasn't paid yet shoud be recorded to the book and that's the moment that the year-end adjusting entry is necessary.

On the above given problem, the salaries paid of $24,000 is presumed to have been recorded in the book already. Because it incurred and paid within the calendar period. In addition, the salaries accrued by the year end needs year-end adjustment<em> to recognize the salaries expense applicable for the period</em>. Journal entry of it is to debit salaries expense and credit salaries payable in the amount of $8,000.

6 0
3 years ago
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