reply to discussion board week 1

During an economic downturn, a nation's central bank decides to implement quantitative easing by purchasing large amounts of government securities to increase the money supply and encourage lending and investment. This policy action is intended to: A) Tighten the money supply B) Increase interest rates C) Stimulate economic growth D) Reduce public spending

Please label your answers to the following questions clearly. (a) Define what is meant by the term monetary policy. (b) Outline what actions the central bank should take in the money market in response to the emergence of significant inflation, and briefly explain what consequences this would have for that market. (c) Briefly describe two ways in which the changes outlined in your answer to Part (b) would be transmitted to the wider economy.

Governments are responsible for maintaining full employment, price stability, and economic growth – using fiscal and monetary policies.   Evaluate how the government of the United States achieves these objectives with the implementation of a Stimulative Monetary Policy.  Clearly state the economic conditions that would justify the use of a stimulative policy, explain the measure(s) that would be taken and the anticipated impact.

The European Central Bank began operation in January 1999. The nineteen countries now covered by the ECB have a single monetary policy.  However, it should be noted that while there is a positive correlation between economic activity in the countries, this correlation is not very high.  Thus, member countries can experience wide ranges of economic conditions.  Like the Fed, the ECB’s stated mission is to maintain a low and stable rate of inflation.  Show and explain how the variance in economic conditions can make the implementation of monetary policy more challenging.  Feel free to comment on any implications in light of the current situation in Europe with regard to the differing impacts of the Covid-19 virus across various eurozone countries.

The Federal Reserve System was established to provide a stable monetary system for the entire economy. The Federal Reserve Bank (the Fed) has three major tools to control the money supply: 1) reserve requirements, 2) discount window for loans to member banks, and 3) open market operations. When the economy is in a recessionary mode, what will likely be the actions by the Federal Reserve using monetary policy? Suppose the Federal Reserve purchases a $100,000 bond from John Doe, who deposits the proceeds in the Manufacturer's National Bank; what will be the impact of this transaction on the supply of money? How do each of the Fed's tools work?

In good economic times, a surge in lending exaggerates the episode of economic growth. Which of the following adaptations of monetary policy can moderate these exaggerated effects?     quantitative easing when banks are under stress   monitoring asset prices and leverage   price stability to reinforce effect of deposit insurance   inflation-targeting lender of last resort policies

Market participants, including financial institutions, fund managers, and corporations, must understand monetary policy setting impacts on economic activity and business A central bank will typically implement monetary policy settings in order to achieve certain economic outcomes over a business cycle. Choose two countries from the list below, describe the intermediate target for monetary policy, and explain the implementation process of the monetary policy in the two countries you selected. Give examples of different economic indicators that may give an insight into the future stages of a business cycle. the United States Australia Singapore China Russia New Zealand

give your recommendation on monetary policy as if you were President of the Dallas Federal Reserve Bank.  Should interest rates be raised, lowered, or stay the same (neutral position)?  Support your decision with specific findings from the report.

Monetary policy For the first time since 2006, the Federal Reserve voted to raise interest rates by a one-quarter percentage point in December 2015.  Prior to this increase, interest rates had remained between the 0.00% - 0.25% range, an area called “the zero lower bound.”  The Federal Reserve had driven interest rates down that low as a means of helping the economy get back on its feet after the Financial Crisis.  The reasoning was that consumers and businesses needed access to loans so that production could turn around.  (Consumers take out loans to buy high price items like cars and homes.  Businesses use loans as a means of expanding their business.  In both instance, more goods will be produced.)  The increase in 2015 moved rates to the 0.25% - 0.50% range.  As of October 2018, interest rates have moved to 1.00% - 1.25% range.  For this discussion board, I want you to do some research into the “Financial Crisis.”  Why did it occur?  Can you characterize the behavior of the…

The Bank of England will prevent members of its interest rate-setting committee from publishing individual opinions on the economy despite a review of its procedures calling for greater transparency.  The Bank said a "collective forecast" will remain the centerpiece of the monetary policy committee's monthly reports, effectively barring members from explaining their own views on the likely path of economic growth, inflation, and unemployment.  Critics of the Bank's policy said the Bank's governor, Sir Mervyn King, had rejected proposals for the public to see a wider range of views because he wanted to maintain a stranglehold on the direction of policy...In response, the Bank said it agreed some procedures were opaque and there was a need for clear lines of responsibility, but said that criticism of the monetary policy committee, which King chairs, were largely unfounded. Explain why then-Bank of England Governor Mervyn King would want to prevent members of the monetary policy committee…

increase or decrease?

Which of the following is considered to be a relatively drastic tool of monetary policy? altering the reserve requirements quantitative easing altering the discount rate reducing the money supply

Suppose that you are employed as an advisor to the central bank. Select the proper policy recommendation or economic prediction for each of the following scenarios. Which policy is appropriate when a rising aggregate price level is a concern but GDP is growing at an acceptable rate? contractionary or restrictive monetary policy (tight money policy) It is unclear which type of monetary policy is appropriate. expansionary monetary policy (easy money policy)   Which policy is appropriate when a rising aggregate price level is a concern and GDP is not growing at an acceptable rate?   It is unclear which type of monetary policy is appropriate. contractionary or restrictive monetary policy (tight money policy) expansionary monetary policy (easy money policy)   Contractionary or restrictive monetary policy (tight money policy) will cause interest rates to   increase sometimes and decrease sometimes. decrease. increase.

The monetary policy rate is the rate at which the Central Bank of Ghana lends to commercial banks. The results from table 4.4.1 shows that the monetary rate in Ghana declined from 2019 to 2021, before rising in 2022. The decline in the monetary rate from 2019 to 2021 can be attributed to an expansionary monetary policy, which was implemented to boost the economy of Ghana by reducing unemployment. The rise in the monetary rate in 2022 is a sign of a contractionary monetary policy, which is intended to reduce money supply and increase the cost of borrowing. This can help control inflation but may also lead to lower economic growth due to reduced aggregate demand (consumption). Consumption which is a component of GDP, the decrease in Aggregate demand will lead to decrease GDP and economic growth at large. Digitalization has become the norm in all parts of life, including finance. Mobile money has acquired substantial acceptance in Ghana as a simple mechanism for fund transfers, payments,…

Monetary policy: Monetary policy refers to the use of interest rates and other monetary tools by the central bank to influence the economy. In the case of a severe negative supply shock, the central bank may lower interest rates to stimulate borrowing and investment, which can boost demand and offset the reduction in supply. However, this may lead to inflation if the increased demand leads to higher prices, which can further erode the purchasing power of consumers.            Explain this graphically please.

Read the following premise carefully and answer the questions specifically and in detail. You must answer the request with the correct information, showing that you understand and can properly apply macroeconomic concepts. Try to address all elements of each question and always express the answers in your own words. Faced with an instability of economic growth caused by a recession or accelerated inflation, the Fed uses the open market operation to increase or decrease the available reserves of commercial banks which, in turn, will affect the amount of money available in the economy . In addition to the open market operation, the Fed has other tools available to promote growth, sustainability, and economic stability in a country. These tools have been used historically; A suitable example was the 2008 mortgage debt crisis. 1. Explain in detail monetary policy, its role and its effects on short and long-term economic fluctuations. Use the aggregate demand and supply model presented in…

The mandate of the South African Reserve Bank (SARB) states that “the Reserve Bank is required to achieve and maintain price stability in the interest of balanced and sustainable economic growth in South Africa”.   There are several macroeconomic determinants that in many ways affect the outlook of the economy, such as inflation, growth, interest rates, unemployment and exchange rates. There has been an ongoing conversation among economists and politicians about the mandate of the SARB.   Do you think that the mandate of the SARB should change? Support your view.

The text provides an illustration of Taylor interest rate rule first proposed in the early 1990s as an automatic way to conduct monetary policy. One version of this rule (for 1988 – 2008 data) is:               Federal Funds Rate = 2.07 + 1.28 x (inflation rate) – 1.95 x (unemployment gap)   For 2020, use an inflation rate of 2% and the unemployment gap is the difference between current unemployment (6.9%) and the natural rate of unemployment (UN) = 4.5%.                           (1) What is the current value of the Federal funds rate?                                                                      (2) What does the Taylor Rule predict?                                                                                               (3) Is there a Phillips Curve relationship in the Taylor Rule? Explain by assuming a fixed federal funds interest rate of 5% and then double the rate of inflation (this is not a numerical calculation problem).

Which of the following is a tool of the Federal Reserve’s monetary policy?   Group of answer choices changes in government spending on goods and services the buying or selling of government securities changes in laws that regulate commercial banks changes in tax rates of households and businesses

Which of the statements best describes the monetary rule, as proposed by the economist Milton Friedman? An acceptable rate of unemployment is targeted and the money supply is adjusted accordingly. Inflation is kept in check by directly manipulating interest rates to decrease bond prices. Inflation is kept in check by increasing the growth of M1 and decreasing the growth of M2 in equal amounts. Inflation is kept in check in the long run by keeping the growth of M1 and M2 on a steady path.

increase or decrease?

What does 'quantitative easing' refer to ? A) A measure used by governments to decrease the amount of money in the economy B) A monetary policy whereby a central bank buys government bonds to inject money into the economy C) A process by which a government decreases tax rates D) A method of reducing the complexity of financial regulations

Show graphically that the less responsive is investment to interest rates, the less effective is monetary policy as a stabilization  tool.

The monetary policy has two basic goals: to promote “maximum” sustainable output and employment and to promote “stable” prices (Federal Reserve Bank of San Franciso). Making these two goals possible is based off of more than just monetary. Technology is now included because technology can replace employment. If people decide to save, it can affect both employment and the goods that can be reduced. There are many other things that can affect the maximizing of sustainable output. The cause-effect chain through is that policy can have an effect on banks and money supply. The monetary policy also has an effect the way consumers spending and the interest rates that are given by banks. It can also affect the way people invest. The major strengths of monetary policy is that it stable prices. When inflation rises faster than expected, the Fed may sell government bonds to take money out of circulation or raise short-term interest rates (Federal Reserve Bank of San…

Which of the following was not proposed as an explanation of why the effectiveness monetary policy was limited during and after the financial crisis of 2007-2009? A) recessions accompanied by financial crises tend to be severe. B) long levels of high unemployment had led to a reduction in the employment to population ratio that would be difficult to reverse. C) the Fed was reluctant to implement nonconventional policies. D) structural changes had taken because important sectors of the economy were deeply affected by the financial crisis. recessions accompanied by financial crises tend to be severe long levels of high unemployment had led to a reduction in the employment to population ratio that would be difficult to reverse. structural changes had occurred because important sectors of the economy were deeply affected by the financial crisis. the Fed was reluctant to implement nonconventional policies.

On June 5, 2003, the European Central Bank acted to decrease the short-term interest rate in Europe by half a percentage point, to 2 percent. The bank’s president at the time, Willem Duisenberg, suggested that, in the future, the bank could reduce rates further. The rate cut was made because European countries were growing very slowly or were in recession. What effect did the bank hope the action would have on the economy? Be specific. What was the hoped-for result on C, I, and Y?

Discuss two monetary policies that could be implemented by the central bank which would have the same impact as the policy implemented below: Interest rates on credit cards would be lowered on starting from 10% to 17% of the current rates. More such declines in credit card interest rates for smaller firms and impacted persons have been proposed by institutions.

Price level 120 Tools AS 110 AD, AD, AD AD AD New CDP 100 94 90 80 70 500 600 700 800 900 1000 Real domestic product, GDP (billions of dollars) a. Use the graph above to show the economy's new level of real GDP. Instructions: Use the tool provided New GDP to plot a point that shows the economy's new level of real GDP. b. According to the results of your graph, the central bank reduced the money supply by too much