ASSIGNMENT
7
Q1 )
AIS)
In
economics
everyday meaning
The
most
when
as
,
familiar
money
,
forms
of
refers
to
people
say
money
money
and
widely
are
they
,
coins
a re
that
assets
the
paper
accepted
and
income
mean
and
used
( currency )
money
leg
wealth
payments
as
"
A
.
differs
This
.
from
the
that
pays
good
money
anything
that
they
want
job
"
)
.
.
on
Ens )
The
functions
three
1) Medium
of
of
are
money
exchange
would
Anyone
:
and
give
,
need
time
2) Unit
of
account
It
:
value
of
is
long
however
On
a
as
like
they
This
contributes
to
partner
for
a
exchange
for
the
measuring
way
of
above
holding
will
activities
in
goods
.
cost
they
are
a
single
This
in
This
.
skilled
most
and
.
uniform
,
is
time
in
measure
linked
closely
is
old
is
want
you
less
at
Having
.
who
person
to
as
an
was
that
which
in
economy
this
thing
different
amongst
If
specific
value
economic
.
trade
to
people
permits
smoother
a
unnecessary
look
to
comparison
mentioned
it
.
in
,
for
unit
point
,
for
specialize
simplifies
It
exchange
used
be
can
basic
.
to
people
a
convenient
of
offer
to
.
as
return
have
would
for
in
trading
impractical Money
allows
used
be
medium
it
:
also
It
value
the
3) Store
.
can
of
and
same
perfect
the
have
this
accept
the
you
,
you
consuming
effort
for
system
what
of
do
can
searching
barter
school
to
willing
they
makes
this
be
with
.
wealth
.
hold
its
value
and
it
can
People
for
can
that
around
it
carry
and
period
keep
or
later
used
be
can
for
it
.
② 3)
A¥s )
The
nations
monetary
policy
which
the
the
,
banks
,
percentage
it
from
borrow
supply
money
and
cut
to
the
determined
is
be
can
Selling
supply
decrease
and
which
the
involve
money
is
supply
money
expansionary
and
it
sells
deposits
raise
,
.
bonds
.
the
this
Increasing
is
also
increases
the
It
.
monetary
money
used
supply
bank
this
which
,
(
CRR
)
is
lower
the
rate
decreasing
operations
market
bonds
,
the
this
it
which
,
supply
money
,
commercial
the
which
(01×10)
increases
tool
another
at
the
using
via
purchases
to
is
and
,
Open
are
ratio
increase
can
tool
a
policy
reserve
reduced
or
Central
the
cash
The
.
expanded
be
When
.
safes
its
in
the
market
supply
money
keeps
of
tools
open
rates
Discount
,
The
.
the
in
bank
the
supply
bank
central
any
decreases
it
bank
contraction
of
that
money
central
the
or
purchasing
when
of
by
decreases
the
.
Qu )
Ats)
The
macroeconomic
1)
The
variables
Price level
effect
that
:
The
thus
,
:
The
the
a
for
higher
the
general
they
will
want
increases
2) Income
demand
the
nominal
the
more
transactions
greater
is
greater
demand
their
are
money
price
to
level
hold
more
demand
that
for
individuals
for
demand
for
,
money
.
the
more
money
money
A
A
.
higher
price
level
to
raises
conduct
the
transactions
need
for
,
liquidity
.
businesses
or
money
.
need
will
people
money
conduct
higher
the
,
income
more
means
liquidity
more
they
transactions
,
need
and
and
hence
,
3)
Interest
rates
The
:
of
theory
expected
the
expected
of
those
money
4)
Expected
inflation
:
on
alternative
liquid
than
rather
money
non
monetary
for
money
would
.
An
increase
and
,
lower
thus
on
the
in
increase
an
people
cause
depends
money
assets
would
assets
which
,
-
demand
the
increases
of
return
and
money
for
demand
the
that
implies
both
money
expected
the
of
returns
return
in
allocation
portfolio
to
want
the
demand
more
for
.
This
higher
future
,
,
the
the
would
value
their
increase
point
invest
rather
hold
inflation
rates
interest
would
people
which
should
value
to
similar
is
,
if
where
,
their
in
money
than
rather
the
non
in
expected
inflation
monetary
assets
which
would
-
money
is
for
the
lose
.
5)
AIN )
The
is
demand
income
on
in
or
how
is
money
used
being
money
①
of
velocity
a
often
greater
proportional
is
interest
rates
money
volume
to
of
real
hands
changes
transactions
income
.
This
period
each
in
turns
"
or
that
assumes
The
.
If
"
over
.
is
rises
of
theory
quantity
velocity
velocity
1W
,
.
6
-1ns)
'
=
500
+
0.24
-
10002
p
MI
a)
500
=
+
0.2
(
1000
)
b)
100010-10 )
-
MI
for
demand
real
IID
500
=
+
money
0.02
(
=
real
420
1000
)
-
1000
420
demand
nominal
(
0.10
)
•
Ild
✗
1¥
"
-
(
1000
0.10
)
=
500
+
0.02
for
(
1000
for
money
=
F-
demand
nominal
42000
11=11
Md
Y
,P÷
2°°(10
84000
10011000 )
42000
velocity
=
demand
money
)
-
=
1000
420
(
0.10
)
100
•
=
0.211000)
200
100
•
+
P
P
•
500
=
=
2.38
velocity
=
2.38
for
money
-_
money
asserts
money
at
constant
a
the
,
84000
and
stock
that
real
doesn't
depend
07)
a)
MV
M
=
(5)
M
b)
PY
(2) (
=
10,000
)
My
4000
nominal
=
demand
PY
(5)
5000
4000
=
-_
for
=
10,000
P=%?÷I
PY
2.5
price level
The
increases
F- =÷
•
10,50002
¥
=
2000
=
6000
P
2000
=P (
10000
)
30.to#
=
=
if
real
(5)
2.5
to
10,0-0-0
2000
=
)
money
=
Mv
PC
=
demand
for
money
the
the
3
nominal
price
money
level
supply
increases
rises
to
to
3
6000
,