Questions from Managerial Economics


Q: What three motives for holding money did Keynes consider in his liquidity

What three motives for holding money did Keynes consider in his liquidity preference theory of the demand for real money balances? Based on these motives, what variables did he think determined the de...

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Q: According to the portfolio theory of money demand, what are the

According to the portfolio theory of money demand, what are the four factors that determine money demand? What changes in these factors can increase the demand for money?

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Q: What evidence is used to assess the stability of the money demand

What evidence is used to assess the stability of the money demand function? What does the evidence suggest about the stability of money demand, and how has this evidence affected monetary policy makin...

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Q: Suppose a new payment technology allows individuals to make payments using U

Suppose a new payment technology allows individuals to make payments using U.S. Treasury bonds (i.e., U.S. Treasury bonds are immediately cashed when needed to make a payment, and that balance is tran...

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Q: Some payment technologies require infrastructure (e.g., merchants need

Some payment technologies require infrastructure (e.g., merchants need to have access to credit card swiping machines). In most developing countries, this infrastructure is either nonexistent or very...

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Q: Go to the St. Louis Federal Reserve FRED database, and

Go to the St. Louis Federal Reserve FRED database, and find data on disposable personal income (DPI), personal saving (PSAVE), and personal consumption expenditures (PCEC). Download the data onto a sp...

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Q: In many countries, people hold money as a cushion against unexpected

In many countries, people hold money as a cushion against unexpected needs arising from a variety of potential scenarios (e.g., banking crises, natural disasters, health problems, unemployment, etc.)...

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Q: Suppose the liquidity preference function is given by L1i, Y2=

Suppose the liquidity preference function is given by L1i, Y2= Y - 1,000i. For the data given in the table below, calculate velocity using Equation 2.

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Q: Plot the values of velocity you found in Problem 7, and

Plot the values of velocity you found in Problem 7, and comment on the volatility (i.e., fluctuations) of velocity. Data from Problem 7: Suppose the liquidity preference function is given by L1i, Y...

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Q: Explain how the following events will affect the demand for money according

Explain how the following events will affect the demand for money according to the portfolio theory approach to money demand: a) The economy experiences a business cycle contraction. b) Brokerage fees...

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