experiencing inflation that exceeds the target rate set by the central bank.

Q: If the central bank sells government securities from the private sector-money markets, other things…

A: Open market operation refers to the sale and purchase of the government securities to regulate the…

Q: One of the three main tools of the Federal Reserve is fiscal policy.  True  False

A: Central Bank: The central bank is the apex bank of the country that supplies the money or maintains…

Q: The Bank of England will prevent members of its interest rate-setting committee from publishing…

A: The opinions of the decision-maker have great impact on investors and general consumers. Any opinion…

Q: complete the following sentence: There is a ________ association between inflation and the growth…

A: Macroeconomics analyzes the economy as a whole. It studies aggregate economic concepts such as…

Q: The government controls economic policy through the fed, though the fed is independent from the…

A: The economy involves many agents which are the producers and the consumers and the government. There…

Q: If the economy is able to self-correct from a negative GDP gap, why might the Fed wish to intervene…

A: A self-correcting economy refers to one that has the ability to stabilize the market without…

Q: Fill in the blanks in the following statements to explain when (business cycle) the Fed will use…

A: The variations of gross domestic product (GDP) around its long-term growth pattern are known as the…

Q: The economy is in an expansion, risking inflation. Which of the following lists contains things…

A: Fiscal policy: - it is a tool of the government of a country in which the government adjusts its…

Q: employment and low inflation

A: The Phillips curve depicts the relationship between the inflation rate and unemployment rate. It…

Q: An economy is currently experiencing inflation that exceeds the target rate set by the central bank.…

A: Inflation is a systematic measure of the rate at which the price level of a basket of goods and…

Q: A decrease in Treasury securities held by the Fed leads to an increase in the money supply. (True…

A: The Fed (i.e., Central bank of Unites States) controls the money supply in the US by open market…

Q: The Fed injects money more slowly into the economy: a)Inflation increases b)Inflation decreases…

A: Fed inject s the money through open market operations, changing interest rate, changing reserve…

Q: Which of the following lists two things that both increase the money supply? a. The Fed buys bonds…

A: The correct option is b.

Q: Why might banks be reluctant to lend money if a country has a history of inflation rising…

A: The banks are the financial intermediaries and institutions that help the savers in the economy to…

Q: In the short run, an unexpected decrease in the money supply results in unemployment rate. in the…

A: The Phillips curve graphically illustrates the economic relationship between the rate of…

Q: are immune from the effects of monetary policy. advise the Fed on monetary policy. O. vote on…

A: The member banks of the federal reserve system would result in the part of the body of the central…

Q: It is May 2008 and the Central Bank is confronted with a rising unemployment rate and rising…

A: The economies around the globe are involved in various activities. These activities are conducted by…

Q: if the central banks sell the securities to the private sector money market other things being equal…

A: The term “Open market operation” is defined as the sale and purchase of securities of the government…

Q: Fill in the blanks in the following statements to explain when (business cycle) the fed will use…

A: Answer: (1). The fed will raise the discount rate during the boom (or expansion) to fix Inflation.…

Q: Governments can control the inflation by allowing the money supply to grow no faster than the number…

A: When spending on labor and goods outpaces production, inflation results. Prices may increase as a…

Q: The demand for money will increase when inflation increases. True or false

A: The demand for money is of three types. These are transaction demand for money, precautionary demand…

Q: The primary function of central banks is to:   a. Increase risk and volatility to increase…

A: The primary function of central banks is to control inflation and help reduce business cycle…

Q: The approaches to monetary policies include choosing Nominal interest rate Money supply Money demand…

A: Monetary policy refers to a set of schemes, rules and regulations undertaken by the central bank of…

Q: The idea that the money supply does not affect real economic variables is known as monetary…

A: Money: - anything that can be accepted as an exchange for goods and services is known as money.

Q: Fill in the blanks in the following statements to explain when (business cycle) the Fed will use…

A: The inflation rate is the rate at which the prices of products and services increases in an economy.

Q: Fill in the blanks The tools that the Fed uses to influence the economy are  (blank) , (blank)  ,…

A: The following problem has been answered as follows:

Q: Monetarists think that an increase in the money supply will stimulate the economy because it will…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Fiscal policy consists of tools used by the Central Bank to control the quantity of money in the…

A: Fiscal policy is the policy in which government modifies the spending levels and taxes to control…

Q: Some central banks like the Reserve Bank of New Zealand are more concerned about price fluctuation…

A: The two scenarios discussed in the question involve positive and negative supply shocks. Both have…

Q: In countries with extremely high inflation, increases in the money supply:     A) are…

A: An extremely high inflation rate (π) is associated with a rapid upsurge in the MS (money supply) in…

Q: Nobel prize-winning economist Milton Friedman once had the following statement: "In- flation is…

A: Inflation refers to the persistent rise in the general price level. Inflation is worrisome for the…

Q: The Fed believes if inflation is high and GDP is high, unemployment is likely to:   a. Increase…

A: Unemployment, the state of one who is equipped for working, effectively looking for work, however…

Q: When real GDP is greater than potential output, it is most likely that the Fed will engage in…

A: There are two types of output: 1. Real output/GDP 2. Potential output/GDP

Q: What is disinflation? What are the two leading causes of inflation? Where online do you find…

A: In an economy, any change in general price level will lead to arise the situation of inflation or…

Q: Identify the sources ofinflation and the roleof monetary policy inpropagating inflation.

A: Inflation is the increment in the overall price-level of the economy. There are different reasons…

Q: Assume the U.S. economy is already operating above the full-employment level of  GDP (i.e., above…

A: The agreement gauge across models is that the tax breaks raised genuine total national output (GDP)…

Q: When the United States economy goes through a period of extended growth, the economy is said to be…

A: The inflation is the increase in the general price level of goods and services. Some level of…

Q: using economic concepts , discuss the impact of the following events on the equilibriumprice level…

A: Contractionary monetary policy is used by a central bank in order to slow down the economy, with the…

Q: If the Fed wants to increase the money supply it will buy bonds. True False

A: Bonds are units of corporate securities that are securitized as tradeable assets and issued by…

Q: The Fed typically increases the money supply by selling government bonds buying government loans…

A: Fed is the CB (central bank) of the US. The central bank of the economy manages the MP (monetary…

Q: Write a response in fewer than 250 words: Is it preferable for central banks to primarily target…

A: Inflation is defined as an increase in the price of goods and services in the economy. A more…

Q: An economy is currently experiencing inflation that exceeds the target rate set by the central bank.…

A: Inflation is the increase in the level of price. If an economy faces inflation which exceed the…

Q: Increases in the rate of inflation Select one: a. Always coincide with a decrease in the…

A: Inflation rate means when prices of good continues rising that is called Inflation.

Q: When monetary policy alters the monetary base the money supply and interest rates will decrease it…

A: Nominal GDP=velocity of money x money supply Here if the money supply increases then the velocity of…

Inflation and Purchasing Power Theory

In economic terms, Inflation refers to the increase in the costs of various commodities which are used in daily lifestyle like food, clothes, transport, etc. over a specific time. It may lead to a fall in the purchasing power of the people and also affects the exchange rate of the currency because of the price increase. As the purchasing power falls the unit of the currency in the economy falls. When the prices of the commodities are decreased, then the purchasing power of the consumers will rise, then it will lead to deflation and changes the currency of the base economy to that of the foreign economy which will lead to change in exchange rates.