Please explain how to get the answers for these questions 1.Which of the followi
ID: 1243254 • Letter: P
Question
Please explain how to get the answers for these questions 1.Which of the following is most likely to lead to an increase of 10% in the nominal demand for money? A) An increase in real income of less than 5% B) A decline of 10% in the price level C) An increase of 10% in the price level D) A decline in real income of less than 5% 2. If the interest elasticity of money demand is -0.15, by what percent does money demand change if the nominal interest rate rises from 2% to 4%? A) -0.3% B) -0.15% C) 0% D) -15% 3.Assuming that money is neutral, an increase in the nominal money supply would cause A) a fall in the price level. B) an increase in the real money supply. C) an excess supply for goods. D) a rise in nominal wages. 4.If real income rises 5%, prices rise 2%, and nominal money demand rises 5%, what is the income elasticity of real money demand? A) 0.60 B) 1 C) 0.40 D) 0.20 5. If the income elasticity of money demand is 0.6 and the interest elasticity of money demand is -0.1, by what percent does money demand rise if income rises 5% and the nominal interest rate rises from 5% to 6%? A) 1% B) 2.50% C) 2.00% D) 3.25%Explanation / Answer
C) An increase of 10% in the price level