what is the reason why monetary policy cannot keep GDP above its full-employment level for an extended period of time?    options:   fiscal policy will not allow this type of monetary policy to continue   nominal wage expectations will eventually adjust to reflect monetary policy induced inflation   restaurants will stop raising prices   the unemployed will eventually prote

Q: f the Federal Reserve conducts a policy of keeping GDP above its full-employment level for a long…

A: Costs and wages start to rise, making firms cut back on creation until the full-business level of…

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: Which of the following is a false statement?

A: An expansion/ boom can be stabilized/fixed by following expansionary fiscal policy. TRUE…

Q: central bank targets an inflation rate of 3%. She projects a long-term economic growth rate of 4%.…

A: Step 1:

Q: If there is a negative inflation gap, and a negative output gap - the policy rule says the Central…

A: Negative Output and inflation gaps occur during the recession, when actual economic output is below…

Q: The economy is experiencing rapid inflation, pushing above 9%.  Which fiscal policy action should…

A: Fiscal policy is a financial tool in the hands of the government to attain economic goal. It does so…

Q: Discuss whether the monetary policy can capably create real effects under the following scenarios…

A: The central bank of the economy is responsible for maintaining the price stability and the maximum…

Q: The most common definition that monetary policymakers use for price stability is   Question 15…

A: Inflation rate is the increase in average price level of goods and services produced in the economy.

Q: Assume that a decrease in investment expenditures drives the economy falls below full employment.…

A: In Keynesian economics, the economy is said to be in equilibrium at a point where the aggregate…

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: Milton Friedman argued nearly all economic fluctuations were caused by Multiple Choice   sticky…

A: The correct option is money supply. Milton Friedman argued nearly all economic fluctuations were…

Q: In the “Classical Theory of Inflation”, what determines the price level and the value of money?…

A: Inflation is defined as the rise in the average price level of commodities and services in the…

Q: Supply-side economics is the school of thought that advocates the use of A monetary policy to…

A: Fiscal policy involves policy actions by federal government to reduce instabilities in prices and…

Q: If the Fed indicates that inflation is likely to be a concern in the near future, the public would…

A: Inflation refers to the rate at which general prices for goods and services in the economy rise. The…

Q: Rational expectations believe that a. the government must change government spending and taxes…

A: Human Beings make rational decisions. They weigh the pros and cons of all situations and then take a…

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: The policies of the federal government influence the outcomes of the various activities in that…

A: (Q) The policies of the federal government influence the outcomes of the various activities in that…

Q: In the monetary perspective: -Discretionary monetary policy is the most effective way to moderate…

A: Monetary policy:   The monetary policy is adopted by the central bank to endure the price stability…

Q: Which of the following is NOT an example of monetary policy to restrict aggregate demand? a)Raising…

A: In an economy, central bank uses different ways to influence aggregate demand according to the need…

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

A: Answer- Need to find- If a recession persists due to nominal wage and price stickiness (i.e., slow…

Q: Federal Reserve independence is thought to   Question 11 options:   a)  help Congress to better…

A: With more independence for federal reserve, the central bank will be more open, transparent and…

Q: Assume the Pakistan’s economy is in recession:Pakistan implements a combination of expansionary…

A: Solution: Crowding out: It is a situation in which an increase in interest rate leads to decrease in…

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: 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: In the last year there has been a significant increase in the inflation rate in Canada. Use the…

A: Transmission mechanism refers to the process where monetary policy affects and influences 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: Use the following scenarios to compare the effectiveness of monetary and fiscal policies with…

A: a) During a recession, monetary policy aims to boost aggregate demand by expanding the money supply.…

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: Why do we care about price stability ? Group of answer choices   All of the options. It is one of…

A: Price Stability : Price Stability can be defined as that level of prices in the economy when the…

Q: Use the loanable fund's diagram to explain how you would expect an increase in inflationary…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Complete the following table to compare the results of an unanticipated expansionary policy to those…

A: When the expansionary monetary policy is anticipated, then it will not have any real impact on the…

Q: Which of the following is true about stagflation?   Multiple Choice It can be corrected by…

A: In an economy, stagflation refers to the situation when people are facing high prices or inflation,…

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: If the Federal Reserve believes that the economy is heating up and there is a risk that inflation…

A: If federal reserve believes that the economy is heating and also there is chances to risk the…

Q: Which of these are advantages of monetary policy relative to fiscal policy? Select all correct…

A: Monetary policy  Monetary policy is a mechanism used by a country's central bank to influence the…

Q: Assume the Federal Reserve has forecasted inflation over the next year to be over its target.…

A: Answer:- (a) making small changes in interest rates over time.

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

A:

Q: An increase in interest rates by the Fed based on a given and unchanged policy reaction function…

A: An increase in interest rate without the policy change would cause a movement on the aggregate…

Q: Expansionary monetary policy:   Question 17 options:   decreases the interest rate and increases…

A: Keynesian Monetary Policy Keynesians do not believe in the direct relationship between money supply…

Q: An economy is currently experiencing inflation that exceeds the target rate set by the central bank.…

A: Inflation is the increase in the level of price. If an economy faces inflation which exceed the…

Q: Which of the following statements concerning the demand for money is false? The speculative demand…

A: The speculative motive for demand for money arises when investing the money in some asset or bond is…

Q: Group of answer choices A) A situation in which business investment is negatively related to the…

A: When investment spending is not responding to decrease in interest rate, then it means that there is…

Q: In the Keynesian view   a. all of the above. b. monetary policy can be ineffective when money demand…

A: Keynesian model refers to one of the widely applied economic theory that gives a specfiic approach…

Q: When the Fed buys bonds (or bond options) on a larger scale (than before) from private banks,…

A: Open market operations are one of the tools that the Fed uses to manage the money supply across the…