If the economy is at equilibrium as shown in the diagram above, then a contractionary monetary policy will Group of answer choices increase unemployment, but have little effect on inflation increase unemployment and decrease inflation increase output and increase inflation have no effect on output, but increase inflation

Q: they must be willing to accept a higher rate of unemployment.

A: Explanation: A contractionary policy refers to the government or financial organization's actions…

Q: Assuming that the aggregate supply in a given economy increases by 7.5 percent, whereas the velocity…

A: Given Information The Percentage of money is constant which means that the percentage change in the…

Q: Why would a central bank implement a monetary policy when the inflation level is higher than…

A: The economies tend to have many entities with them, all of which are concerned with performing…

Q: All of the following are nontraditional tools of monetary policy except Group of answer choices…

A: Central bank is the regulator of the banking system of the country. The primary aim of the central…

Q: In your own words, explain the difference between an expansionary/easy money policy and a…

A: Recession refers to a situation when the actual output level falls short of the potential output…

Q: True or false.  The data show that the velocity of M1 is unchanging, which is one reason for why…

A: The question relates to the economic theory called the Quantity Theory of Money.

Q: Describe expansionary and restrictive monetary policies, and explain why and how they are used…

A: Hi Student, Thanks for posting the question. As per the guideline, we are providing answer for the…

Q: the long-run federal funds target is also zero. If the inflation rate is 4 percent and the output…

A: Federal funds rate = long run target+ 1.5(inflation rate – inflation target) + 0.5(output gap)…

Q: The supply-side effects show that a tax cut on labor income ________ the supply of labor and…

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

Q: he channels through which monetary policy affects economic activity are called the ‎ * allocational…

A: (Since you have asked many questions, we will solve the first one for you. If you want any specific…

Q: Fill in the following table by identifying whether it’s a fiscal policy or monetary policy. Also…

A: Type of policy and effect on money supply is shown in below table.

Q: The result of all the above is a “Great Recession.” Under a recession, output and incomes decrease,…

A: Monetary Policy involves the steps taken by Fed in order to control the money supply and rate of…

Q: This question addresses the issue of whether monetary policy should be made by discretionary policy…

A: Discretionary policies are an economic policy focused on policymakers' ad hoc judgment as opposed to…

Q: Which one of the following statements is true? Group of answer choices The total supply of money is…

A: Money supply affects the entire economy. Thus, money supply is controlled by the central bank of…

Q: Inflation targeting involves A. an information - inclusive approach in which many variables are used…

A: Inflation targeting refers to a process whereby the central bank of the country makes an…

Q: using a graph of aggregate demand and supply explain how monetary policymakers would respond to…

A: The standard objectives of monetary policy makers are to accomplish or keep up full work, to…

Q: he effect of monetary inflation on interest rates would be:     to cause rates to initially fall,…

A: Here answer is  to cause rates to initially fall, but as prices rise, interest rates will also…

Q: Monetary policy affects the economy with a long lag, in part because A. proposals to change…

A: The central bank of the economy controls the monetary policy. The influence of the demand in the…

Q: Market participants, including financial institutions, fund managers, and corporations, must…

A: The intermediate target for monetary policy  The inflation projection is used as the intermediate…

Q: What interest rate essentially serves as the ceiling on how high the federal funds rate can go? What…

A: Banks are required to keep a required amount of reserves with them, known as required reserves. "The…

Q: What are the results of a contractionary monetary policy, which intends to slow down the economy,…

A: The monetary policy is the policy of the monetary authority of the economy regarding the money…

Q: Which of the following was not proposed as an explanation of why the effectiveness monetary policy…

A: When talking about financial crisis, it can be seen that the impact of monetary policy is limited…

Q: In order to combat inflation, the Fed will ________ the federal funds rate thereby ________ the…

A: In order to combat inflation, the fed will increase the rate of federal funds. Which results in less…

Q: If the central bank increases the supply of money, a new equilibrium is reached by A rightward shift…

A: Money Supply: - In an economy, the total value of money in circulation at a point in time is known…

Q: If monetary policy tries to keep GDP above its full employment level for an extended period of time…

A: When an economy manufactures goods or products at higher economic rates than normal, it is regarded…

Q: If a recession persists due to nominal wage and price stickiness (slow adjustments of nominal wages…

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

Q: Suppose the Federal Reserve (the US central bank) increases the money stock. Create a graph that…

A: The federal reserve is the central bank of the US and it is responsible for maintaining the…

Q: A way for policymakers to avoid the problems that deflation can present and still meet their…

A: The deflationary situation indicates decreasing price level. Since the price level decreases, it…

Q: Assume the economy is characterized by rational expectations. If the Federal Reserve seeks to…

A: Considering the rational expectations of the consumers in the economy, when the federal reserve try…

Q: Be it resolved that the monetary policy is superior to fiscal policy in controlling inflation.…

A: The policy that expands and contracts the supply of money for influencing growth and inflation and…

Q: Suppose the economy is experiencing a recession. If the Federal Reserve enacts expansionary monetary…

A: In an economy, recession refers to the situation when there is a significant fall in the economic…

Q: "If a central bank's desired intermediate target is a monetary aggregate (money supply), then its…

A: Monetary Policy  Monetary policy refers to the policy of the central bank by which the central bank…

Q: Which of the statements best describes the monetary rule, as proposed by the economist Milton…

A: According to Nobel-prize winning economist Milton Friedman, the economy needed to increase its money…

Q: Which of the following best describes the cause-effect chain of an expansionary monetary policy?

A: Monetary Policy(MP) is a policy adopted by the Central Bank or the government of the company to…

Q: There are four main transmission channels that can be used as monetary policy to target the official…

A: Monetary policy is used by the Central Bank of the country to regulate the income of the economy by…

Q: The economy is “overheated” and inflation is running high. Should Fed follow an expansionary or…

A: Monetary policies are actions undertaken by a central bank to control money supply and to achieve a…

Q: The following is TRUE about monetary policy EXCEPT,   A) It uses interest rate and money supply as…

A: Monetary policy is a tool used by central bank to affect aggregate demand and thus real GDP in the…

Q: If a recession persists due to nominal wage and price stickiness (i.e., slow adjustment of nominal…

A: Answer: Correct option: (D) expansionary monetary policy Explanation: In the case of a recession,…

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: In modern developed economies, central banks (like the U.S. Federal Reserve System) perform at least…

A: In the mentioned question, the function of the central bank is asked.

Q: Assume the economy is currently in Recession and the Federal Reserve has chosen to use the required…

A: Given that central bank chooses required reserve policy as a tool, in times of recession, the bank…

Q: In the basic New Keynesian​ model, if anticipated future inflation decreases and the central bank…

A:

Q: Suppose the economy is experiencing a recession. If the Federal Reserve enacts expansionary monetary…

A: Recession is a period when the economy is producing less than potential output.

Q: True or false question.  Open market operations is a monetary policy tool that involves buying and…

A: Open market operations (OMO) alludes to a national bank trading transient Treasuries and different…

Q: According to the European Central Bank website, the treaty establishing the European Community…

A: In economics, there are four stages in the business cycle. These phases are described as expansion,…

Q: Which of the following is true of a central bank that employs inflation targeting? A target rate of…

A: Inflation targeting can be done by central bank by expanding or contracting money supply.