138.) Austrian economists are worried about monetary policy that increases the money supply because An increase in the money supply causes consumers to borrow more - potentially too much more - in the short-run (overconsumption) An increase in the money supply reduces savings and increases future income available for new products An increase in the money supply causes investors to invest in projects that have higher expected rates of return (malinvestment) all of the above are correct

138.) Austrian economists are worried about monetary policy that increases the money supply because An increase in the money supply causes consumers to borrow more - potentially too much more - in the short-run (overconsumption) An increase in the money supply reduces savings and increases future income available for new products An increase in the money supply causes investors to invest in projects that have higher expected rates of return (malinvestment) all of the above are correct

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter15: Monetary Theory And Policy

Section: Chapter Questions

Problem 2.5P

See similar textbooks

Similar questions

60. Suppose the central bank wishes to increase the money supply directly. To do so, it could buy government securities on the open market. sell some of its foreign currency assets. sell government securities on the open market. change the price level. reduce its deposits at commercial banks.
23. Which of the following is not a way that the United States government attempts to control the growth of the American economy and control for inflation? A. by changing reserve requirements B. by raising national debt C. by changing interest rates D. by changing money supply
2) Suppose that the monetary policymaker to control the inflation level in thecountry decreased the level of money supply in the country. How that changewill generate impacts on the money market, bond market and foreign exchange market in the short and in the long run? (Use graphs) (10 points)
E1 Suppose the Central Bank of Bothnia buys Treasury Bonds. What will be the impact on the price level and real GDP in the country of Bothnia? Would the purchase of treasury bonds be considered expansionary or contractionary policy AND would this be fiscal or monetary policy?
20. Assuming that prices of various consumer goods increase in the country. This event will _____________ and cause the interest rates in the money market to ___________. A. increase the supply of money; fall B.decrease the supply of money; rise C. increase the demand for money; fall D. increase the demand for money; rise
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,…
138.) Austrian economists are worried about monetary policy that increases the money supply because An increase in the money supply causes consumers to borrow more - potentially too much more - in the short-run (overconsumption) An increase in the money supply reduces savings and increases future income available for new products An increase in the money supply causes investors to invest in projects that have higher expected rates of return (malinvestment) all of the above are correct
3b Using your knowledge of money and banking, show how the equation of exchange can be used to confirm the quantity theory of money. Ensure to elaborate from your demonstration why money supply is a key driver of inflation
19 The following is TRUE about monetary policy EXCEPT, It relates to revenue and expenditure by government budget. It manages the creation and flow of money and credit in the economy. It aims to control the money supply and regulate the monetary sector. It uses interest rate and money supply as monetary tools.
45. Suppose the Federal Reserve releases a policy statement today which leads people to believe that the Fed will be enacting contractionary monetary policy soon. Everything else held constant, the release of this statement would immediately cause the demand for U.S. financial assets to ______ and the U.S. dollar to _______. Select one: increase; appreciate decrease; appreciate increase; depreciate decrease; depreciate 44. If the government were to cut the personal income tax at the same time that it were to increase the corporate profits tax, the equilibrium price of bonds would ________, everything else held constant. Select one: decrease be ambiguous.
41. Because of the volatility of food and energy prices, the Bank of Canada pays more attention in the short run to changes in ________ than to changes in ________. total CPI inflation; inflation of the GDP deflator inflation of the GDP deflator; total CPI inflation core inflation; total CPI inflation total CPI inflation; core inflation the nominal exchange rate; the real exchange rate
22 An increase in the price level results in a decline in aggregate demand because higher prices will cause the nominal interest rates to increase and GDP to drop. This effect is called the: Group of answer choices wealth effect. income effect. interest rate effect. trade effect.