We can shift the AD curve to the right by lowering taxes having the Fed buy bonds from banks lowering interest rates doing expansionary fiscal policy All listed options are correct.
Q: When there is a problem of a delay in terms of implementation of the fiscal policy, that would be…
A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: As a result of an economic policy change, interest rates and consumption rise but investment falls.…
A: Fiscal and monetary policies are two main tools to correct the economic imbalances . Where expansion…
Q: Give an example of a monetary policy action that could produce an increase in aggregate demand. Give…
A: AD(aggregate demand) is the sum of C(consumption), I(investment), G(government spending) in closed…
Q: Which of the following statements about Fiscal Policy is INCORRECT? choose the correct answer (a) In…
A: Fiscal policy is independently implemented or used by the government to make changes in the market…
Q: Using the IS-LM model and assuming the central bank conducts monetary policy by manipulating the…
A: The LM represents Liquidity and Money. On the upward pivot of the chart, 'r' addresses the loan fee…
Q: _________________ implements fiscal policy and _______________ implements monetary policy (what…
A: Fiscal and monetary policy are the two economic policy used to make desired changes in the economy…
Q: Compare and contrast both fiscal policy and monetary Policy
A: Answer: Comparison: Fiscal policy Monetary policy Fiscal policy is undertaken by the government…
Q: When a central bank uses its powers over the banking system to engage in “against the business…
A: Monetary Policy refers to a policy that influences the economy by manipulating the banking system's…
Q: In the liquidity trap case where the LM schedule is nearly horizontal a. both monetary and fiscal…
A: The monetary policy is completely ineffective because the demand for money is completely/ perfectly…
Q: There is a liquidity trap in the i-M space graph. Show what this means in the i-M graph and then…
A: In Keynesian economies, a liquidity trap is defined as a situation in which the interest rate…
Q: In the short run, a rise in the federal funds rate ________ the price level and ________ real GDP.…
A: In the short run when the federal funds rate increase so investment falls and so does output and…
Q: _________________ formulates fiscal policy and _______________ formulates monetary policy (what…
A: Both the President and Congress sets fiscal policy. Both the executive and legislative branches of…
Q: In a closed economy, fiscal authorities are deciding between the two following alternative policies:…
A: In case of recession in the market the government takes steps to boost the market performance and…
Q: From 2008, how might monetary policy (as reflected in the OCR) have affected the degree of crowding…
A: Monetary policy refers to change in money supply and money demand by central banks through open…
Q: You are advising the Bank of Canada and the Federal Government. The economy is in a state of…
A: The monetary policies are those policies which are enacted by the central bank of a country to…
Q: Define the following concepts: Sticky Prices Expansion and contraction Inflation, Deflation and…
A: Sticky prices: it implies that the price remains constant despite the changes in the economy or that…
Q: Most economists agree that individual consumers and business cannot pull the economy out of a severe…
A: AT some extent this statement is true because economy is big where larger numbers of buyers and…
Q: What specific monetary policy tools would you use to stimulate aggregate demand and how? What…
A: Monetary policy refers to the policy used by the central bank to interfere in the economy to push…
Q: Which of the following might cause the AD curve to shift to the right? an increase in…
A: The AD bend, like most typical demand bends, slopes downward from left to right. Demand rises or…
Q: Expansionary monetary policy and contractionary fiscal policy has a combined effect which is…
A: "In macro-economics, the monetary policy is the actions taken by the central bank of an economy to…
Q: When the economy slows down heading towards a recession, then the appropriate monetary policy would…
A: During recession, the demand started to decline and unemployment started rising. Monetary policy is…
Q: To fix a negative supply shock in an economy, ___________should be used. a. contractionary…
A: The economies around the globe are focused on maximizing the level of their growth, and development.…
Q: Explain the mechanism how monetary policy (by reducing money supply) can shift the AD to the left!…
A: Increases in the multiple base interest rates set by modern central banks or other measures of…
Q: _________________ formulates fiscal policy and _______________ formulates monetary policy (what…
A: Fiscal policies refers to policies formulated by the government which influence an economy through…
Q: Which of the following statements is false? It might sometimes make sense for a government to…
A: Monetary Policy helps to obtain price stability, full employment, and economic growth whereas Fiscal…
Q: Respond to the following in a minimum of 175 words: Explain the chain of events that occurs for…
A: Monetary policy refers to the central bank policies that directly influence the quantity of money…
Q: explain how monetary and fiscal policy is implemented and how they can be used to influence GDP and…
A: Both fiscal and monetary policy play a significant role in economic management, with direct and…
Q: Can you explain policy lags briefly and compare fiscal and monetarypolicies with respect to inside…
A: A policy lag implies the lag between the time when economic problem arises and the effect of the…
Q: iscal policy is used by [ Choose ] [Choose ] used by the Department of Trade decreasing taxes/…
A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…
Q: In the most recent FOMC meeting, the Federal Reserve increased the Federal Funds rate. By doing…
A:
Q: The AD schedule becomes flatter if: fiscal policy is relaxed. interest rate…
A: Aggregate demand basically refers to the whole quantity of demand for all completed products and…
Q: Expansionary monetary policy (cet. par.) means that the Z curve in Z-Y space shifts up. True, False,…
A: Fiscal and monetary policy are the economic instruments that are used by the government to control…
Q: What is the current concern regarding the federal fund rate? Group of answer choices it is too high…
A: The Current federal funds rate is around 0%
Q: The economy is experiencing negative GDP growth and high unemployment. Which fiscal policy action…
A: Meaning of Fiscal Policy: The term fiscal policy refers to the situation under which the…
Q: Describe what will happen to the interest rate and output with the implementation of following…
A: Macroeconomics is a part of economics that deals with production, decision and allocation concerning…
Q: In the most recent FOMC meeting, the Federal Reserve increased the Federal Funds rate. By doing…
A: The Federal Reserve is seeking to orchestrate a so-called “soft landing” for the US economy, raising…
Q: Why has the FOMC maintained federal funds rate at their current level of 0 - 0.25% in its recent…
A: The Federal Open Market Committee (FOMC) sets the target interest rate at which commercial banks…
Q: ow does government or Fed recover the economy in the short run. Please use figures and words to…
A: In the short run, the economy may move away from the full employment level, also known as the…
Q: Describe the policy mix that would result in each of the follow- ing situations. a. The interest…
A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: Which statement below is true of ONLY fiscal policy? Uses government expenditures to create demand…
A: The fiscal policy is the policy of the central government regarding the taxation and the government…
Q: In the liquidity trap O Monetary policy should contrast high inflation O The government should…
A: As per Keynes, money is demanded to pursue three main motives- transactionary motive, precautionary…
Q: Under conditions of a liquidity trap and interest-insensitive investment, Keynesians would be most…
A: Under conditions of a liquidity trap and interest-insensitive investment, Keynesians would be most…
Q: Assume that the economy begins in long-run equilibrium and that the federal reserve decides to use…
A: When federal reserve decides to sell bonds in open market then it will decrease the money supply in…
Q: The 'automatic mechanism' can best be described as using fiscal or monetary policies to stabilize…
A: Automatic Mechanism is also known as self correction.
Q: Use AD and AS curves to explain the effects on the equilibrium price level and equilibrium level of…
A: While looking at the big picture, we try to understand two types of equilibrium: one that impacts…
Q: When the government or the central bank conduct expansionary fiscal or monetary policy, the…
A: Suppose, in an economy, the government implements expansionary fiscal policy in which government…
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- Read the following excerpts. Identify whether the policy action is fiscal or monetary and expansionary or contractionary. Draw and label the change that would occur on the AD/AS graph as a result of the policy action described in each. Identify what will happen as a result of the policy to the price level, employment, and real GDP. Excerpt from FOMC Statement Released December 16, 2008 “The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to ¼ percent. Since the Committee’s last meeting labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.” Identify whether the policy action is fiscal or monetary. Identify whether the policy action is expansionary or contractionary. Draw and label the change…Read the following excerpt. Identify whether the policy action is fiscal or monetary and expansionary or contractionary. Draw and label the change that would occur on the AD/AS graph as a result of the policy action described. Identify what will happen as a result of the policy to the price level, employment, and real GDP. Excerpt from FOMC Statement Released December 16, 2008 “The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to ¼ percent. Since the Committee’s last meeting labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.” Identify whether the policy action is fiscal or monetary. Identify whether the policy action is expansionary or contractionary. Draw and label the change that…Which fiscal policy is meant to decrease aggregate demand? a. Divisionary b. Built in c. Expansionary d. Contractionary
- Use AD and AS curves to explain the effects on the equilibrium price level and equilibrium level of output in the short run.(a) An expansionary fiscal policy with the economy operating near full capacity. (b) A contractionary monetary policy during a period of high unemployment and excess industrial capacity. (c) A strong hurricane destroys energy plants which cause energy prices to increase, assuming that the Fed attempts to keep interest rates constant by accommodating inflation. (d) The federal government pursues a contractionary fiscal policy while the Fed acts to keep output from falling.Read the following excerpts. Identify whether the policy action is fiscal or monetary and expansionary or contractionary. Draw and label the change that would occur on the AD/AS graph as a result of the policy action described in each. Identify what will happen as a result of the policy to the price level, employment, and real GDP. Excerpt from FOMC Meeting Minutes Press Release February 6, 1981 “Shortly after the November 18 meeting, incoming data indicated that the monetary aggregates were growing considerably faster than the rates consistent with the Committee’s objectives for the September-to-December period… These developments were associated with additional upward pressures on the federal funds rate and other short-term interest rates; in the first statement week after the meeting, the funds rate was at about or somewhat above the upper limit of the range of 13 to 17 percent specified by the Committee, compared with an average of 14 ½ percent in mid-November. In a telephone…Consider an economy suffering from recession (with its real GDP below the potential level). Using a basic (static) aggregate demand — aggregate supply (AD-AS) diagram explain how the fiscal policy may help boost the economy during a recession. Is the expansionary fiscal policy necessarily inflationary? Explain your answer using the AD-AS model. Use a suitable diagram to explain how an expansionary fiscal policy may affect the value of the Australian dollar against the Chinese yuan (assume no change in policies in China).
- Explain and discuss contactionary fiscal policy and contactionary monetary policy with IS-LM graphs and explain its affects on consumption, aggregate demand .If money demand becomes more sensitive to changes in income, then a. the LM curve will become flatter b. the AD curve will become flatter c. fiscal policy will be more effective d. Impossible to say without further informationCan you explain policy lags briefly and compare fiscal and monetarypolicies with respect to inside and outside lags. thanks.
- Which of the following statements about Fiscal Policy is INCORRECT?(a) In order to combat inflation, the South African Reserve Bank must apply acontractionary fiscal policy;(b) A contractionary fiscal policy can result in higher levels of unemployment; (c) Expansionary fiscal policy will increase the budget deficit; (d) The application of fiscal policy will have no effect on aggregate supply in the AD‐AS model.Read the following excerpts. Identify whether the policy action is fiscal or monetary and expansionary or contractionary. Draw and label the change that would occur on the AD/AS graph as a result of the policy action described in each. Identify what will happen as a result of the policy to the price level, employment, and real GDP. Excerpt from President Jimmy Carter’s televised speech delivered October 24, 1978 “Good evening. I want to have a frank talk with you tonight about our most serious domestic problem. That problem is inflation. Inflation can threaten all the economic gains we’ve made, and it can stand in the way of what we want to achieve in the future. This has been a long-time threat. For the last 10 years, the annual inflation rate in the United States has averaged 6-1/2 percent. And during the three years before my inauguration, it had increased to an average of 8 percent. If inflation gets worse, several things will happen. Your purchasing power will continue to decline,…Describe what will happen to the interest rate and output with the implementation of following policies.(Use AD/AS model and use graph) Expantionary fiscal policy Contractionary monetary policy
