The diagram below shows a shift in the

money demand curve for an economy.

Which of the following could explain what is observed in the

diagram?

Assume an economy where:

PAE = C + I^P + G

C = C₀ + c(Y-T)

I = I₀

G = G₀

T = T₀ + tY

Assume that the

marginal propensity to consume is 0.75 and the marginal tax rate is 0.2.

The balanced budget multiplier for this economy is:

PAE = C + I^P + G; 

C = C₀ + c(Y-T) ;   I^P = I₀ ;   G= G₀;   T = T₀ + tY.

With the evolution of the financial system, combined with advancements in monetary policy and risk management, many countries (e.g., Australia and Canada) have abolished some minimum required ______ on banks. This practice can boost economic activity and foster economic growth.

Which of the following ratio is the best fit to fill in the blank?

The following equations describe a closed economy, where Y* is potential GDP.

C = 10+0.8(Y-T)

I^P = 240

G = 60

T = 50

Y* = 1,200

To close the output gap in this economy, what is the required change in government expenditure?

Consider this statement and fill in the blanks with the appropriate words:

“An automatic fiscal stabiliser is a tax or transfer system that – once in place – acts to _______________ the effects of ____________ changes in expenditure on the magnitude of business cycle fluctuations.”

Using the quantity theory of money, what is the rate of inflation in country C between 2021 and 2022?