Question: 1) a) What is money? b) What are the functions of money? c) Explain the costs of barter system. d) Write down the money supply definitions in Turkey. 2) Which tools can the central bank use to apply a contractionary monetary policy? 3) Consider an economy with following equations and answer the questions: C = 320 0,5 Ya. I = 250, 6= 250, NT 210, X = 80, M =Show transcribed image text1.a.Money is a commodity accepted by general consent as a medium of economic exchange. It is the medium in which prices and values are expressed. It circulates from person to person and country to country, facilitating trade, and it is the principal…View the full answerTranscribed image text: 1) a) What is money? b) What are the functions of money? c) Explain the costs of barter system. d) Write down the money supply definitions in Turkey. 2) Which tools can the central bank use to apply a contractionary monetary policy? 3) Consider an economy with following equations and answer the questions: C = 320 0,5 Ya. I = 250, 6= 250, NT 210, X = 80, M = 180 a) What is the equilibrium level of output for this economy? b) If government applies a contractionary fiscal policy and changes net taxes by $30, what will be the effect of this change on the equilibrium level of output? What will be the new equilibrium level of output? (use multiplier) c) At the equilibrium level of output is there a budget deficit or a budget surplus? Calculate the quantity. d) If government wants to reach a $90 higher aggregate output level with no change in the budget deficit, how much should the government spending and/or taxes increase or decrease?
