Which of the following is true of a central bank that employs inflation targeting? A target rate of employment is maintained by expanding or contracting the money supply. A target rate of annual inflation is maintained by hiring or firing federal employees. A target rate of annual inflation is maintained by increasing or decreasing tax revenues. A target rate of annual inflation is maintained by expanding or contracting the money supply.

Q: How does rule-based monetary policy differ from discretionary monetary policy (that is, monetary…

A: Macroeconomic policy refers to the policy that is involved with the operation of the economy as a…

Q: A problem that the Fed faces when it attempts to control the money supply is that the Fed can only…

A: The ‘Federal Reserve System(FRS)’, also known as the Fed, is the ‘central bank’ of the country U.…

Q: Assuming that the aggregate supply in a given economy increases by 7.5 percent, whereas the velocity…

A: Given Information The Percentage of money is constant which means that the percentage change in the…

Q: The common traditional consensus among economists is that the central bank cannot target both…

A: The central bank can control inflation and recession by monetary policy tools, but it can target one…

Q: Assume the economy is currently in Recession and the Federal Reserve has chosen to use the required…

A: If the Federal Reserve System decides to lower the reserve ratio through an expansionary monetary…

Q: There are two types of open market operations carried out by the central bank, dynamic and defensive…

A: Open market operations, sometimes known as OMO are when a central bank buys or sells short-term…

Q: Classify the actions described as examples of expansionary monetary policy (intended to stimulate…

A: Expansionary monetary policy- It is the action taken by the central bank to use different policies…

Q: All of the following are nontraditional tools of monetary policy except Group of answer choices…

A: Central bank is the regulator of the banking system of the country. The primary aim of the central…

Q: Which of the following is one of the​ Fed's policy​ tools? One of the​ Fed's policy tools is​…

A: Monetary policy: - it is a tool of government or central bank of a country in which they control…

Q: the long-run federal funds target is also zero. If the inflation rate is 4 percent and the output…

A: Federal funds rate = long run target+ 1.5(inflation rate – inflation target) + 0.5(output gap)…

Q: When the Federal Reserve buys government securities/bonds on the open market, what effect does this…

A: Buying securities is the action of the central banking authority investing in government assets, so…

Q: when the growth rate of the money supplt is decreased, interest rates will fall immediately if the…

A: When the growth rate of the money supply is decreased, interest rates will rise immediately if the…

Q: When the Federal Reserve system (the Fed) sells bonds to banks, we would expect them to lower the…

A: Monetary policy is implemented and managed by the central bank of the country. While the fiscal…

Q: he channels through which monetary policy affects economic activity are called the ‎ * allocational…

A: (Since you have asked many questions, we will solve the first one for you. If you want any specific…

Q: ase, can you answer the question below? I do not need an explanation. Thank you. Which of the…

A: A central bank is a bank which owned and run by the government of that country whereit is situataed…

Q: Fill in the following table by identifying whether it’s a fiscal policy or monetary policy. Also…

A: Type of policy and effect on money supply is shown in below table.

Q: The result of all the above is a “Great Recession.” Under a recession, output and incomes decrease,…

A: Monetary Policy involves the steps taken by Fed in order to control the money supply and rate of…

Q: Which one of the following statements is true? Group of answer choices The total supply of money is…

A: Money supply affects the entire economy. Thus, money supply is controlled by the central bank of…

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: By dictating the amount of money commercial banks must keep in the bank, the __________ represents…

A: Reserve requirement is the fund that banks need to put in reserves in order to meet liabilities if…

Q: Wells Fargo Bank sells a $1,000 Treasury security to a securities dealer.  The dealer pays for the…

A: Money Supply: - In an economy, the total value of money in circulation at a point in time is known…

Q: Which of the following is not an essential element of inflation​targeting?     A. increased…

A: Monetary policy is the policy regarding money supply in the economy. The monetary policy is operated…

Q: What are the results of a contractionary monetary policy, which intends to slow down the economy,…

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

Q: Which of the following monetary tools is the Fed most likely to use for carrying out its day-to-day…

A: Monetary policy is the policy of the central bank to maintain stability in the inflation rate in the…

Q: An expansionary policy aims at increasing the money supply, which of the following is an example of…

A: The expansionary policy is used to increase money supply where the Fed can do the following: 1.…

Q: Which of these is the Fed likely to do during a recession? Select one: a. Sell government bonds…

A: Recession refers to the situation of economic slowdown, which is characterized by a fall in the…

Q: When the growth rate of the money supply is increased, interest rates will fall immediately if the…

A: When the growth rate of the money supply is decreased, interest rates will rise immediately if the…

Q: If the economy is at equilibrium as shown in the diagram above, then a contractionary monetary…

A: The aggregate demand and the aggregate supply in the economy determine the macroeconomic equilbrium.…

Q: If a society chooses fiat money as its money form, it __________. Group of answer choices A. will…

A: Fiat money is the money which is issued by the order of the government . Like Currency and coins .

Q: The Tools available when using fiscal policy are Interest Rates The Federal Reserve Open Market…

A: Fiscal policy is the policy enacted by the government. It includes managing taxation and government…

Q: Which of the following would cause the money supply curve to shift to the left? Select one: a. A…

A: Federal Reserve is the organization that is responsible for managing money supply in the economy

Q: To increase the money supply, the Fed can Group of answer choices buy government bonds or decrease…

A: Expansionary monetary policy:- This is the policy that is used by the central bank to increase the…

Q: In the SARB buys and sells certain financial assets like treasury bills and government bonds in the…

A: Open market operations (OMO) refers to a central bank buying or marketing short-run Treasuries and…

Q: "If a central bank's desired intermediate target is a monetary aggregate (money supply), then its…

A: Monetary Policy  Monetary policy refers to the policy of the central bank by which the central bank…

Q: Which of the following best describes the cause-effect chain of an expansionary monetary policy?

A: Monetary Policy(MP) is a policy adopted by the Central Bank or the government of the company to…

Q: Of the three policy tools that CBK can use to change the money supply, the one that does not affect…

A:

Q: There are four main transmission channels that can be used as monetary policy to target the official…

A: Monetary policy is used by the Central Bank of the country to regulate the income of the economy by…

Q: The economy is “overheated” and inflation is running high. Should Fed follow an expansionary or…

A: Monetary policies are actions undertaken by a central bank to control money supply and to achieve a…

Q: Bankers’ business decisions effect the money supply because bankers   a. All of these responses are…

A: Supply of money refers to the total value of money that is circulated in the economy. This is…

Q: If the Fed wanted to raise the Federal funds rate using open market operations, other things equal,…

A: Open market operations refer to purchase and sale of   security bills to affect money supply in the…

Q: In modern developed economies, central banks (like the U.S. Federal Reserve System) perform at least…

A: In the mentioned question, the function of the central bank is asked.

Q: Higher unemployment rates for those 25 years old and younger in many European​ nations, in…

A:

Q: The Federal Reserve Bank relies on three tools to engage in monetary policy:   Question 7 options:…

A: Federal Reserve Bank is the central bank of the U. S. It can influence the economy through monetary…

Q: The most effective tool of Monetary Policy at the Fed's disposal is Open Market Operations.   the…

A: The Monetary Policy helps to regulate the money supply which helps in economic growth.

Q: By increasing the required reserve​ ratio, the Fed forces banks to hold a​ _______ quantity of…

A: The required reserve ratio would be the certain minimum amount of reserves which the commercial…

Q: What is a likely direct result in bank behavior after the Fed lowers required reserve rate?     No…

A: The reserve requirement ratio is the legally required proportion of deposits that banks must hold…

Q: A central bank that increases the money supply in its economy has more effect on spending the more…

A: The total volume of money that is being held by the public at a particular point of time in the…

Q: The main purpose of expansionary monetary policy is to Select one a reduce interest rates and…

A: Changes in the money supply or in the short-term interest rates constitute monetary policy.

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.