The two most important functions of central banks are to: Question 12 options: a) execute monetary policy and promote competition in the financial sector. b) execute monetary policy and keep interest rates low. c) execute monetary policy and ensure that there is sufficient home mortgage credit. d) execute monetary policy

The two most important functions of central banks are to: Question 12 options: a) execute monetary policy and promote competition in the financial sector. b) execute monetary policy and keep interest rates low. c) execute monetary policy and ensure that there is sufficient home mortgage credit. d) execute monetary policy

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter13: Monetary Policy: Conventional And Unconventional

Section: Chapter Questions

Problem 2DQ

See similar textbooks

Similar questions

When a central bank uses its powers over the banking system to engage in “against the business cycle" monetary policy, this is called: countercyclical policy fiscal policy contractionary policy expansionary policy
In modern developed economies, central banks (like the U.S. Federal Reserve System) perform at least two major tasks; they: Select one: a. conduct fiscal policy and serve as financial intermediaries. b. control the money supply and collect tax revenues. c. conduct fiscal policy and serve as lenders of last resort. d. control the money supply and regulate banks.
The main responsibility of a Central bank is: Fiscal but not monetary policy Monetary but not fiscal policy Neither monetary or fiscal policy Both monetary and fiscal policy
“Monetary policy is the macroeconomic policy laid down by the central bank of an economy.”In terms of the above statement, explain how monetary policy can be used to combat inflation
Which of the statements best describes the monetary rule, as proposed by the economist Milton Friedman? An acceptable rate of unemployment is targeted and the money supply is adjusted accordingly. Inflation is kept in check by directly manipulating interest rates to decrease bond prices. Inflation is kept in check by increasing the growth of M1 and decreasing the growth of M2 in equal amounts. Inflation is kept in check in the long run by keeping the growth of M1 and M2 on a steady path.
Panamanian currency, the balboa, is fixed at one-to-one to the U.S. dollar which is also a legal tender in the country. Panama does not have a central bank. Explain why a central bank is not needed and the advantages and disadvantages of this monetary system..
The primary objective of monetary policy is a. To control base lending rates. b. To maintain price stability by ensuring low rates of inflation. c. To prevent imported inflation. d. As a substitute for fiscal policy.
Why might eliminating the central bank’s independence lead to a more pronounced political businesscycle?
which of the following is a monetary policy that might be used to reduce inflation A. Decreasing tax rates for US citizens B. Decreasing the rate of interest paid on bank reserves held at the federal reserve. C. Open market selling of bonds D. Increasing government spending
All of the following are nontraditional tools of monetary policy except Group of answer choices Buying and selling of bonds thru open market operations Bailing out Investment banks Guaranteeing loans by banks for private businesses Buying long term bonds to influence mortgage rates..
What is the main argument for having a Central Bank independent from the government for the purposes of monetary policy? Select one: a. An independent Central Bank would have more resources available to devote towards implementing monetary policy b. An independent Central Bank would be more knowledgeable about the state of the economy. Consequently, the Central Bank would be better suited to implementing monetary policy c. The Central Bank is more credible in its inflation and cash rate targets. Consequently, inflation expectations will adjust appropriately to monetary policy announcements d. Having an independent Central Bank prevents any economic trade-offs when making monetary policy choices
Contrast the extent to which central banks are independent in at least 3 develop countries and 3 Caribbean countries.