Answer the Questions Below

question 71

Essay

Answer the questions below:
(A) Esgalan how each of the fallowng waula affect the money demand functian:
1. An increase in the cast of lving
2. Financial innovations that make it possible to write checks against saving and maney market accounts
3. Financial innovations that make it possible to electunically pay bills aut of 5aping and money market accaunts
4. The December holiday seasan
(B) If the Fed maintans constant growth of the money supply, what happens to interest rates as the maney demand function moves araund?
(C) Given that the maney demand function tends to move araund is it better policy to maintan canstant prowth of the money supply or a constant level af interest rates?

---

Definitions:

LCD Televisions

A type of television that utilizes Liquid Crystal Display technology to project images, known for their slim profiles and energy efficiency.

Decreasing-cost Industry

An industry where average costs of production decrease as the industry grows, often due to economies of scale.

Demand Curve

An economic representation that illustrates the quantity of a good that consumers are willing and able to buy at various prices, typically downward sloping from left to right.

Productive Efficiency

A state where goods are produced at the lowest possible cost, utilizing resources effectively without waste.