QUESTION 2 A. What is money? Explain the three functions that money performs. B. Assume that for the economy of Northvil

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QUESTION 2 A. What is money? Explain the three functions that money performs. B. Assume that for the economy of Northvil

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Question 2 A What Is Money Explain The Three Functions That Money Performs B Assume That For The Economy Of Northvil 1
Question 2 A What Is Money Explain The Three Functions That Money Performs B Assume That For The Economy Of Northvil 1 (423.91 KiB) Viewed 29 times
QUESTION 2 A. What is money? Explain the three functions that money performs. B. Assume that for the economy of Northville equilibrium interest rate is 8%. a. Sketch the demand and the supply for money and identify the equilibrium interest rate. (3 marks) b. On the same diagram show an interest rate that will result in i. excess demand and excess supply c. Explain how the Central Bank might carry out a "tight" monetary policy. (6 marks) C. State the two factors that could cause an increase in the demand for money a. Show graphically the impact on equilibrium interest rate. D. Explain the process of money creation through the commercial banks. (4 marks) (6 marks) (2 marks) (3 marks) (6 marks)
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