When the money market is drawn with the value of money on the vertical axis as the price level decreases the quantity of money?
Calculate the Price
| Over the past 70 years, prices in the US have risen about | 4 precent |
|---|---|
| When the money market is drawn with the value of money on the vertical axis, a decrease in the price level causes a | movement to the left alone the money demand curve |
When the price level rises the value of money falls?
As the price level falls, the value of money rises. The price level is actually a measure of the value of money. 1/P represents the value of money measured in terms of goods and services.
When the price level falls What happens to the number of dollars needed to buy a representative basket of goods?
falls, because the number of dollars needed to buy a representative basket of goods falls. rises, because the number of dollars needed to buy a representative basket of goods rises. a. 1/P represents the value of money measured in terms of goods and services.
What shifts the money market graph?
It shifts in with the nominal interest rate. When the quantity of money demanded increase, the price of money (interest rates) also increases, and causes the demand curve to increase and shift to the right. A decrease in demand would shift the curve to the left.
How do you calculate opportunity cost of holding money?
To calculate the opportunity cost of holding money, you simply subtract 100 (your initial money) from the amount you could have earned by saving it. For example, if you decided to carry money instead of investing it for two years at 5% interest, then it in effect cost you $10.25 to carry that money.
How do you know if an opportunity cost is increasing or decreasing?
When the PPC is a straight line, opportunity costs are the same no matter how far you move along the curve. When the PPC is concave (bowed out), opportunity costs increase as you move along the curve. When the PPC is convex (bowed in), opportunity costs are decreasing.
What is the law of increasing opportunity cost?
The law of increasing opportunity cost states that each time the same decision is made in resource allocation, the opportunity cost will increase. The law of increasing opportunity costs states that the opportunity cost of having three employees performing inventory is significant.
Which of the following is the underlying reason for the law of increasing opportunity cost?
Resources are not equally suited to the production of all goods. Higher prices cause production of all goods to increase.
Which reflects the law of increasing opportunity cost?
Increasing opportunity costs are reflected in the concave-from-the-origin shape of the curve. This means the economy must give up larger and larger amounts of rockets to get constant added amounts of automobiles—and vice versa. c. The economy is underutilizing its available resources.
What is the opportunity cost in this scenario Mikael has saved 4000?
Answer Expert Verified. All the cost sums up to $4,000 when there is no extra charge. In this case, the opportunity cost is the same with the total cost. In this case Mikael is willing to forgo $4,000 for this opportunity and it makes his opportunity cost.