In his “The General Theory of Employment, Interest and Money, 1936”, John Maynard Keynes stated that ‘When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.’ Do you agree with Keynes’ statement that market failure is inevitable in financial markets? Justify your answer with reference to economic theory and evidence.

Q: Discuss how the Bank of England can control the money supply and interest rates and then reflect on…

A: The Bank of England has the capacity to control the money supply of money in the economy by either…

Q: Critically analyze what facts determine the impact of an interest rate change? How effective is…

A: The amount of interest due every period, expressed as a percentage of the amount lent, deposited, or…

Q: Your childhood friend believes Commercial banks no longer have any relevance in the current economic…

A: Commercial banks are the financial institutions that provide various banking services to people and…

Q: The following excerpt is taken from the Ministry of Finance: Statement on the economic effects and…

A: We are authorized to answer three subparts at a time, since you have not mentioned which part you…

Q: Is the following statement TRUE or FALSE? Please provide reason for the answer. If the central bank…

A: Open market operation refers to the selling and buying of government bonds by the central bank.

Q: The following excerpt is taken from the Ministry of Finance: Statement on the economic effects and…

A: Aggregate demand is the sum of consumption spending, investment spending, government spending, and…

Q: Discuss briefly whether zero interest rate policy is advantageous or disadvantageous to economy.

A: Zero interest rate lowers the cost of borrowing and people take more loans and as a result capital…

Q: How Central Bank can use monetary policy to prevent the stock market bubble? Explain how the policy…

A: Monetary policy: It refers to that policies which are used by the central banks or governments to…

Q: The central bank decided to raise interest rates when it wanted to reduce aggregate demand to fight…

A: Introduction Central bank is the head bank of the country all the commercial bank and public sector…

Q: How will an expansionary monetary policy affect the GDP when the economy is at less than full…

A: Effect of monetary policy at employment is less than full employment Because of the impact of…

Q: Briefly discuss how the central bank plays the role of controller of credit in an economy?

A: Commercial banks tend to create during their course of operations a lot of credit. This credit could…

Q: Suppose that Dmitri, an economist from a research institute in Texas, and Frances, an economist from…

A: We will answer the first question since the exact one was not specified. Please submit a new…

Q: Give one of the commonly used monetary theories and briefly discuss

A: Monetary Theory was developed by Milton Friedman. Monetarists are concentrating on keeping inflation…

Q: Which of the following is a government function that regulates the economy to ensure that it…

A: The government of a country is responsible for fair and smooth functioning in the country. To…

Q: What does the Fisher Effect tell us about the bond and loanable funds markets?

A: In classical economics, the equilibrium interest rate in the economy is determined in the loanable…

Q: Using the macroeconomic environment where banks sources its inputs and to which it sells its…

A: The term "macro-environment" refers to how the macroeconomic environment in which a company or…

Q: According to liquidity preference theory, if the price level increases, then the equilibrium…

A: The principle of liquidity preference is a representation that illustrates that a buyer can claim a…

Q: The following graph represents the money market in a hypothetical economy. As in the United States,…

A: (a) If the Fed announcing that it is lowering the target interest rate by 0.75 percent, the Fed will…

Q: Support your answer with calculations please. Suppose an economy in which the public holds 10% of…

A: We know that the monetary base is the sum of currency C and reserve R MB=C+R             .... (1)…

Q: What will happen in the bond market if the government imposes a limit on the amount of daily…

A: If the government limits the number of transactions in the bond market, then it would make it…

Q: Can CDOs create a liquidity squeeze in the financial markets ?

A: A CDO is a financial instrument that rewards shareholders from a collection of revenue-generating…

Q: If the central bank’s goal is to maximize output, what interest rate will we expect in equilibrium?

A: The actions undertaken by the monetary authority of an economy, usually the central bank, to promote…

Q: Thinking about a bond, an economist would argue that it really is ... Group of answer choices 1. A…

A: When talking about bonds in economics, it is considered as a monetary instrument that is used to…

Q: What is a Liquidity Preference Theory?

A: The economics as a study is based upon the idea that there is a limit to the resources present with…

Q: Explain the relationship between the effectiveness of monetary policy and the interest elasticity of…

A: Relationship between the effectiveness of monetary policy and the interest elasticity of investment…

Q: Suppose that the central bank finds that the economy is operating as depicted in the accompanying…

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

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: Briefly explain the affects of time lags on monetary policy

A: The monetary policy refers to the policies used by central bank to control money supply and regulate…

Q: If the central bank’s goal is to maximize output, what interest rate will we expect in equilibrium?…

A: The central bank employs monetary policy to influence the output of the economy by varying the…

Q: Robust economy growth ships the transactions demand for money. Consequently, growth will tend to…

A: The money demand refers to the quantity of money demanded by the people in an economy. It can arise…

Q: Read the following extract about an aspect of the UK in 2013 and decide whether it is describing a…

A: The economies around the globe are considered to focus on their growth, and development. The…

Q: Explain how the central banks are able to reduce the level of aggregate demand in an economy by…

A: The central bank has the ability to influence aggregate demand in the market by changing the level…

Q: Which of the following statements is consistent with a given (i.e., fixed) IS curve? Select one: a.…

A: * ANSWER :-  *(8)  * The OPTION B (a reduction in the interest rate causes investment spending to…

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: The following graph represents the money market in a hypothetical economy. As in the United States,…

A: When the central bank decides to increase the target interest rate, it implements a contractionary…

Q: Why did the Federal Reserve lower interest rates? What other measures can the Federal Reserve take…

A: Central bank lowers interest rate as a tool or mechanism to increase the economic activities in the…

Q: If an analyst was considering the effects of interest rates on future direction of the economy,…

A: As far as the impact of interest rate on the future direction of the economy are concerned, the…