III. True/False - Explain: 1) According to Walras Law excess demand in the money market would also be associated with an excess demand for bonds. 2) When the Fed lowers the discount rate the money supply might or might not increase. 3) The money multiplier has changed dramatically in the last few years because of significant changes in s. 4) The federal funds rate is an interest rate that the Fed directly controls. 5) An expansionary monetary shock leads to a net decrease in investment because of monetary feedback. 6) Fiscal crowd-out can be avoided by decreasing M when expansionary fiscal shocks are implemented. 7) Banks with excess reserves can potentially create DDs in excess of their level of excess reserves. 8) The money supply in the United States has increased dramatically in the last few years because the money multiplier has significantly increased. 9) Fiscal policy is more effective when money demand is very responsive to interest rate changes.

III. True/False - Explain: 1) According to Walras Law excess demand in the money market would also be associated with an excess demand for bonds. 2) When the Fed lowers the discount rate the money supply might or might not increase. 3) The money multiplier has changed dramatically in the last few years because of significant changes in s. 4) The federal funds rate is an interest rate that the Fed directly controls. 5) An expansionary monetary shock leads to a net decrease in investment because of monetary feedback. 6) Fiscal crowd-out can be avoided by decreasing M when expansionary fiscal shocks are implemented. 7) Banks with excess reserves can potentially create DDs in excess of their level of excess reserves. 8) The money supply in the United States has increased dramatically in the last few years because the money multiplier has significantly increased. 9) Fiscal policy is more effective when money demand is very responsive to interest rate changes.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter24: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 1PA

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Question

III. True/False – Explain:
1) According to Walras Law excess demand in the money market would also be
associated with an excess demand for bonds.
2) When the Fed lowers the discount rate the money supply might or might not
increase.
3) The money multiplier has changed dramatically in the last few years because of
significant changes in s.
4) The federal funds rate is an interest rate that the Fed directly controls.
5) An expansionary monetary shock leads to a net decrease in investment because
of monetary feedback.
6) Fiscal crowd-out can be avoided by decreasing M when expansionary fiscal
shocks are implemented.
7) Banks with excess reserves can potentially create DDs in excess of their level of
excess reserves.
8) The money supply in the United States has increased dramatically in the last
few years because the money multiplier has significantly increased.
9) Fiscal policy is more effective when money demand is very responsive to
interest rate changes.

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