17.When the Bank of Canada fights inflation,. А. a decrease in the federal funds rate decreases aggregate demand В. a decrease in bank reserves decreases the quantity of money demanded С. an open market purchase increases the overnight loans rate D. a decrease in the supply of loanable funds raises the long-term interest rate and increases investment

17.When the Bank of Canada fights inflation,. А. a decrease in the federal funds rate decreases aggregate demand В. a decrease in bank reserves decreases the quantity of money demanded С. an open market purchase increases the overnight loans rate D. a decrease in the supply of loanable funds raises the long-term interest rate and increases investment

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles

Section: Chapter Questions

Problem 6E

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4. When nominal interest rates are zero, the central bank can still lower them by printing moneyand purchasing bonds from banks. This increases the supply of loanable funds and stimulateslending.5. A pro-savings policy by the US would likely reduce the US trade deficit.6. When savings equals investment, reducing savings and increasing consumption is especiallyeffective in stimulating output.
12 Assume that the Saudi economy is in a recession and SAMA decides to implement an expansionary monetary policy. Use appropriately labeled graphs to trace the impact of an expansionary monetary policy on the: the money market, market for loanable funds aggregate goods market
Which of these is True? O. The world credit-money supply was hugely contracted before the crash, which is why homes were so expensive O. Central Banks create 'Base Money O. Central Banks create all the money supply O. The collapse of hte dollar is the reason the US housing market was flooded with loanable funds O. Central Banks promoted speculation (perhaps unwittingly with their tight money policy in the years of the pre 2008 bubble O. Private banks only pass on deposits when they make loans 8. Private banks create money. O. True O. False
true/false explain 4. When nominal interest rates are zero, the central bank can still lower them by printing money and purchasing bonds from banks. This increases the supply of loanable funds and stimulates lending.
According to the theory of liquidity preference, aneconomy’s interest rate adjustsa. to balance the supply and demand for loanablefunds.b. to balance the supply and demand for money.c. one-for-one to changes in expected inflation.d. to equal the interest rate prevailing in worldfinancial markets.
instructions: tackle question b only A. Given that in an economy, Given that in an economy, C = 102+0.7Y, I=150-100r, MS =300, Mt = 0.4Y, and Mz=125-200r where, Y= income, C= consumption, I= investment, MS= money supply, Mt= transactional-precautionary money demand, Mz= speculative money demand and r= interest rate. Calculate;1. The equilibrium level of income and interest rate in this economy.2. The level of C, I, Mt, and Mz when the economy is in equilibrium. B. Now, assuming the economy is open with government (G) participation and external trade which is summarized as follows; export(X)= 100-0.10Y, import(M)=50, G=100, Taxes(T)= 100 and C, I, MS, Mt, and Mz the same as defined in (a) above. Calculate; i. The equilibrium income and interest rate in this new economy. ii. The level of C, I, Mt, and Mz when the economy is in equilibrium iii. What exchange rate policy should government implement in (iii) to enhance income and why?
1. Labor market rigidities and explain how they might cause the relatively high unemployment inEurope.2. There are two channels through which the US crisis became a world crisis. The trade channel and the financial channel.3. The multiplier illustrates the extent to which equilibrium output will change as a result of agiven change in autonomous demand. 4. Bonds are considered as assets for a central bank but for a bank as well. Explain the statements whether T/F elaborately...
State whether each statement below is TRUE or FALSE. Briefly explain each answer. a. If Canadian assets become less liquid compared to European assets, Canadian dollar will depreciate. b. Suppose the economy is currently experiencing an inflationary gap, an autonomous monetary policy easing will bring RGDP back to its natural rate. c. Holding everything else constant, if stocks become riskier compared to bonds, interest rate will increase? d. Everything else held constant, suppose the economy is currently producing at the natural rate of output, increase in interest rate, in the short-run, decreases inflation rate and increases unemployment rate.
If the U.S. government's budget deficits are increasing aggregate demand, and the economy is producing at a level that is substantially less than potential GDP, then: a) government borrowing is likely to crowd out private investment. b) an inflationary increase in the price level is in real danger. c) the central bank might react with an expansionary monetary policy. d) higher interest rates will crowd out private investment.
In an economy where the central bank implements negative interest rates as a monetary policy tool, what is the most likely short-term impact on consumer savings behavior and bank profitability? A. An increase in consumer savings as people seek to safeguard their money and a rise in bank profitability due to increased lending. B. A decrease in consumer savings as the incentive to save diminishes and a decrease in bank profitability due to lower interest margins. C. No significant change in consumer savings behavior but an improvement in bank profitability due to lower borrowing costs. D. A shift in consumer investment towards riskier assets and challenges in bank profitability due to compressed interest margins. Please don't use chatgpt it is giving wrong answer and please provide valuable answer
As a result of the central bank’s open-market purchase of bonds, what is the dollar value of the maximum amount of new loans JMH Bank can make? Explain.
If C = 5 + 0.6Y, I = 4 – 0.2 r, G = 5, T = 6, X = 10 dan M = 10 + 0.3 Y, Ms = 20, Mdt = 0.1 Y and Mds = 5 – 0.1 r where C is consumption expenditure, Y is income, I is investment, G is government expenditure, T is tax, X is export, M is import, Ms is money supply, Mdt is money demand for transactian and Mds money demand for speculation. Form the IS curve for the economy above.