quiz 6

What is the expected impact of a decline in the money supply to the US economy?   A. Higher aggregate prices (inflation)   B. Lower aggregate prices (deflation)   C. There is no general relationship between the money supply and inflaton

a. What are the fiscal policy tools the government can use to expand an economy that is in a recession? Explain the interaction between monetary and fiscal policy?b. Explain how monetary policy is expected to affect investment and aggregate expenditure and discuss its connection with interest rates and output?

Suppose that the Bank of Canada determines that the Canadian economy is currently overproducing. What can the Central Bank do to slow down economic activity? a. The Central bank can pursue an expansionary monetary policy by increasing the money supply, causing a decrease in the interest rate. As a result, real GDP will increase and the price level will increase. b. The Central bank can pursue a contractionary monetary policy by decreasing the money supply, causing a decrease in the interest rate. As a result, real GDP will decrease and the price level will decrease c. The Central bank can pursue a contractionary monetary policy by decreasing the money supply, causing an increase in the interest rate. As a result, real GDP will decrease and the price level will decrease. d. The Central bank can pursue a contractionary monetary policy by decreasing the money supply, causing an increase in the interest rate. As a result, real GDP will decrease and the price level will increase e. The…

Which of the following is true of monetary policy?   a. If the Fed wants to increase the money supply, it should increase the interest rate it pays banks on their reserves.     b. The long and variable lags between a shift in monetary policy and when the policy shift affects output and employment makes it easier for the Fed to time monetary policy properly.     c. A monetary policy that maintains price stability provides the foundation for both economic stability and the smooth operation of a market economy.     d. The Fed should try to push real interest rates to the lowest possible level in order to stimulate investment and aggregate demand.

9. Which of the following will result in expansionary monetary or fiscal policy being the LEAST effective in increasing real GDP? A. The LRAS curve has a negative slope B. Aggregate demand is less elastic than aggregate supply C. Wages and prices are very flexible and change quickly in reaction to policy changes D. The SRAS curve is perfectly elastic

When the Fed controls the rate of growth of the money supply to foster macroeconomic stability, this is called:   A. Fiscal Policy   B. Monetary Policy   C. Money Supply Policy   D. Fed Policy

Explain the relationship between the effectiveness of monetary policy and the interest elasticity of money demand. Will the monetary policy be more or less effective the higher the interest elasticity of money demand? Explain.

a. Monetary Policy involves changing (Click to select) (Click to select) b. (Click to select) address an Inflationary Gap. In the United States, Monetary Policy is implemented by the can be used to address a Recessionary Gap; while (Click to select) 2 V c. To enact Contractionary Monetary Policy, the central bank will (Click to select) bonds. This (Click to select) V the amount of cash in the economy. This will cause bond prices to [(Click to select), and interest rates to [(Click to select) · The change in interest rates causes investment and consumption to [(Click to select) › shifting (Click to select) (Click to select) ✓ can be used to d. To enact Expansionary Monetary Policy, the central bank will [(Click to select) bonds. This (Click to select) the amount of cash in the economy. This will cause bond prices to [(Click to select) lect) ✓], and interest rates to (Click to select) ✓. The change in interest rates causes investment and consumption to (Click to select) shifting (Click…

4.This is a two-part assignment using the links below plus additional resources. Using the below links interpret the monetary and fiscal policies as either expansionary or contractionary. Define which school of thought supports each of the polices. Make sure to cite at least three sources either in MLA or APA style and have a minimum of 250 words. Here are some sources to get started https://www.whitehouse.gov/issues/budget-spending/ (Links to an external site.) https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

37. Supply-side economics is the school of thought that advocates the use of   A) monetary policy to stimulate long-run aggregate supply.   B) fiscal policy to stimulate long-run aggregate demand.   C) monetary policy to stimulate short-run aggregate demand.   D) fiscal policy to stimulate long-run aggregate supply.

1. What are lags and why are they important when designing fiscal and monetary policies? (Make sure to contrast the differences in lags between monetary and fiscal policies). 2. Is the long-term scorecard of monetary and fiscal policies in the US more of a learning curve with significant successes or an example of poor government efforts at economic stabilization?

TOPIC: Monetary policy and the problem of inflationary and recessionary gaps

1. The Fed's job in manipulating monetary policy is made harder by the fact that: A) monetary authorities do not have a good understanding of how monetary policy works. B) monetary policy is usually pulling the economy in the opposite direction from fiscal policy. C) the Fed has to operate in real time and information on recessions usually becomes available with a lag. D) monetary policy is hardly ever effective in influencing business fluctuations. E) the Treasury Department cannot accommodate every demand placed on it by the Fed.   2. Monetary policy will be less effective at offsetting A) drops in velocity B) decreasing dynamic aggregate demand C) negative supply side shocks D) increases in consumer confidence

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3. Suppose the reserve requirement for the United States is 8%. Instructions: Round your answers to the nearest whole number. a. Suppose the Federal Reserve wants to increase the money supply. What should it do to accomplish this goal? billion. The Fed could make an open market purchase v of $30 billion, resulting in a total increase in the money supply of $| b. Now suppose the Fed wants to decrease the money supply. What should it do to accomplish this goal? billion. v of $20 billion, resulting in a total decrease in the money supply of $ The Fed could make an open market sale

1a. What is the proper objective function for monetary policy? b. How transparent should the central bank be? c. Should a central bank adopt formal inflation targeting? d. Should monetary policy be made by an individual or a committee? e. Should central banks also be bank supervisors?