var imagesSmall = ",,,,"; var imagesMedium = ",,,,"; var imagesLarge = "kwmodsecon3eupdates-numbered_fig-ch15_fig_2,kwmodsecon3eupdates-numbered_fig-ch15_fig_3,kwmodsecon3eupdates-numbered_fig-ch15_fig_4,kwmodsecon3eupdates-numbered_fig-ch15_fig_6,kwmodsecon3eupdates-numbered_fig-ch15_fig_9,kwmodsecon3eupdates-numbered_fig-ch15_fig_10,kwmodsecon3eupdates-numbered_fig-ch15_fig_11,kwmodsecon3eupdates-numbered_fig-ch15_fig_12,kwmodsecon3eupdates-numbered_fig-ch15_fig_13,,,"; var imagesXlarge = "kwmodsecon3eupdates-unnumbered_fig-ch15_un_01,kwmodsecon3eupdates-numbered_fig-ch15_fig_5,kwmodsecon3eupdates-numbered_fig-ch15_fig_7,kwmodsecon3eupdates-numbered_fig-ch15_fig_8,,,"; var imagesXXlarge = ",,,,,,,"; /*** CYU answers ***/ xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-1-1a'] = "
By increasing the opportunity cost of holding money, a high interest rate reduces the quantity of money demanded. This is a movement up and to the left along the money demand curve.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-1-1b'] = "A 10% fall in prices reduces the quantity of money demanded at any given interest rate, shifting the money demand curve leftward.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-1-1c'] = "This technological change reduces the quantity of money demanded at any given interest rate. So it shifts the money demand curve leftward.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-1-1d'] = "This will increase the demand for money at any given interest rate. With more of the economy’s assets in overseas bank accounts that are difficult to access, people will want to hold more cash to finance purchases.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-1-2a'] = "A 1% processing fee on debit/credit card transactions for purchases less than $50 reduces the opportunity cost of holding cash because consumers will save money by paying with cash.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-1-2b'] = "An increase in the interest paid on six-month CDs raises the opportunity cost of holding cash because holding cash requires forgoing the higher interest paid.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-1-2c'] = "This reduces the opportunity cost of holding cash because it can now be used to fund purchases at very low prices, compensating its owner for any interest forgone by holding cash.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-1-2d'] = "Because many purchases of food are made in cash, a significant increase in the cost of food reduces the opportunity cost of holding cash.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-2-1a'] = "In the accompanying diagram, the increase in the demand for money is shown as a rightward shift of the money demand curve, from MD1 to MD2. This raises the equilibrium interest rate from r1 to r2.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-2-2a'] = "In order to prevent the interest rate from rising, the Federal Reserve must make an open-market purchase of Treasury bills, shifting the money supply curve rightward. This is shown in the accompanying diagram as the move from MS1 to MS2.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-2-3a'] = "Frannie is better off buying a one-year bond today and a one-year bond next year because this allows her to get the higher interest rate one year from now.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-2-3b'] = "Frannie is better off buying a two-year bond today because it gives her a higher interest rate in the second year than if she bought two one-year bonds.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-3-1a'] = "The money supply curve shifts to the right.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-3-1b'] = "The equilibrium interest rate falls.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-3-1c'] = "Investment spending rises, due to the fall in the interest rate.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-3-1d'] = "Consumer spending rises, due to the multiplier process.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-3-1e'] = "Aggregate output rises because of the rightward shift of the aggregate demand curve.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-3-2a'] = "The central bank that uses a Taylor rule is likely to respond more directly to a financial crisis than one that uses inflation targeting because with a Taylor rule the central bank does not have to set policy to meet a prespecified inflation target.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-4-1a'] = "Aggregate output rises in the short run, then falls back to equal potential output in the long run.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-4-1b'] = "The aggregate price level rises in the short run, but by less than 25%. It rises further in the long run, for a total increase of 25%.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-4-1c'] = "The interest rate falls in the short run, then rises back to its original level in the long run.
"; xBookUtils.showAnswers['kwmodsecon3eupdates-cyu-15-4-2a'] = "In the short run, a change in the interest rate alters the economy because it affects investment spending, which in turn affects aggregate demand and real GDP through the multiplier process. However, in the long run, changes in consumer spending and investment spending will eventually result in changes in nominal wages and the nominal prices of other factors of production. For example, an expansionary monetary policy will eventually cause a rise in factor prices; a contractionary policy will eventually cause a fall in factor prices. In response, the short-run aggregate supply curve will shift to move the economy back to longrun equilibrium. So in the long run monetary policy has no effect on the economy.
"; ////// disable links to chapter $("[data-target='_self']").each(function(index, element) { $(this).attr('data-type', 'txt'); $(this).css('pointer-events','none'); $(this).css('cursor','default'); //alert('[2]_self: ' + $(this).attr('data-type')); }); ///// figure height $("[data-type='figure']").each(function(index, element) { var fig_id = $(this).attr('id'); var fig_w = $(this).css('width'); var img_id = $(element).find('img').attr('id'); var img_w = $(element).find('img').width; var img_h = $(element).find('img').height; //alert(fig_id + '\n\n' + fig_w + '\n\n' + img_id + '\n\n' + img_w + '\n\n' + img_h); //alert(fig_id ); });