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Textbooks / Business / Principles of Economics 6 / Chapter 34 / Problem Problems and Applications 34.1

Explain how each of the following developments would affect the supply of money, the

Principles of Economics | 6th Edition | ISBN: 9780538453059 | Authors: N. Gregory Mankiw ISBN: 9780538453059 472

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Principles of Economics | 6th Edition

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Principles of Economics | 6th Edition | ISBN: 9780538453059 | Authors: N. Gregory Mankiw

Principles of Economics | 6th Edition

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Problem Problems and Applications 34.1

Explain how each of the following developments would affect the supply of money, the demand for money, and the interest rate. Illustrate your answers with diagrams. a. The Feds bond traders buy bonds in openmarket operations. b. An increase in credit-card availability reduces the cash people hold. c. The Federal Reserve reduces banks reserve requirements. d. Households decide to hold more money to use for holiday shopping. e. A wave of optimism boosts business investment and expands aggregate demand.

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Ch 1: The Importance of MIS - Technology fundamentally changes business - Digital revolution: moving from mechanical or analog devices to digital devices - Information age: production, distribution, and control od information primary economic drivers - Employers want someone who can think on their own but is a team player - Bell’s Law: states that a new class of computers establishes a new industry each decade. This gives way to new platforms, programming environments, industries, networks, and information systems - Moore’s Law: The number of transistors per square inch on an integrated chip doubles every 18 months o This means that computers are getting exponentially faster, and the cost of processing data is approaching zero - Metcalfe’s Law:

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Textbook: Principles of Economics
Edition: 6
Author: N. Gregory Mankiw
ISBN: 9780538453059

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Explain how each of the following developments would affect the supply of money, the