Which of the following policy options would simultaneously increase interest rates and decrease output in the short-run? The Central Bank sells bonds through open market operations. B The government increases taxes. The Central Bank expands the money supply. D The government increases its spending.
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- Which of these are characteristics of the economy that led to the Crash of 1929? New roads and electricity grids are built. New roads and electricity grids are built. Store credit becomes available. Store credit becomes available. New technologies like television are introduced. New technologies like television are introduced. The end of World War II leads to the opening of new markets. The end of World War II leads to the opening of new markets. More companies offer stocks. More companies offer stocks. Low interest rates are available. Low interest rates are available. Growth in the stock market encourages new investors. Growth in the stock market encourages new investors.Assume that the central bank buys securities from member banks using open-market operations. Which of the following will decrease in the short run? Group of answer choices Investment Aggregate demand Interest rate TaxesIncrease in interest rates causes the supply curve to shift. Monetary expansion causes a decrease in equilibrium rate. Total wealth causes a movement of interest rate along the supply curve. Improving economic conditions causes the demand curve to shift inward. a. Three statements are correct. b. Two statements are correct. c. Only one statement is correct. d. All statements are correct.
- Consider an economy that is initially in its long-run equilibrium. Suppose this economy suffers a temporary negative supply shock. If the central bank’s sole objective is to stabilize output in the short-run, then what will happen after the central bank has responded according to its objective? A. Inflation will be lower, output will back at its original level B. Inflation will be lower, output will be lower C. Inflation will be higher, output will be higher D. Inflation will be lower, output will be higher E. Inflation will be higher, output will be lower F. Inflation will be higher, output will back at its original level“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 inflationIf the Federal Reserve pursues an expansionary monetary policy, interest rates will ________ and the short-run price level will ________. A decrease; decrease B increase; increase increase; C decrease decrease; D increase increase; remain constant..
- An unexpected increase in the money supply increases ".........." in the short run and redistributes wealth "........" in the long run? employment; from creditors to debtors employment; from debtors to creditors unemployment; from creditors to debtors unemployment; from debtors to creditorsHow will the following affect (increase or decrease) the price level (in the long run)? (a) a decrease in credit card usage (b) an increase in the usage of cryptocurrencies for transaction purposes (c) a significant increase in the interest rate on excess reserves (d) technological progress that increases real GDPDefine the following concepts: Sticky Prices Expansion and contraction Inflation, Deflation and Hyperinflation Fiscal Policy and Monetary Policy
- Assume a country’s economy is currently in recession. Draw a correctly labeled graph of the long-run aggregate supply, short-run aggregate supply, and aggregate demand curves, and show each of the following. Current real output, labeled Y1, and current price level, labeled PL1 Full employment output, labeled Yf Identify one action the central bank can take to help the economy recover from the recession. Draw a correctly labeled graph of the money market, and show the impact of the central bank’s action identified in part (b) on the nominal interest rate. On your graph for part (a), show the effect of the central bank’s action identified in part (b) on real output and the price level. Assume there is an increase in business confidence as a result of the central bank’s action. What will happen to the demand for capital goods? Draw a correctly labeled graph of the loanable funds market, and show the effect of the change identified in part (e)(i) on the real interest…Assume a country’s economy is currently in recession. Draw a correctly labeled graph of the long-run aggregate supply, short-run aggregate supply, and aggregate demand curves, and show each of the following. Current real output, labeled Y1, and current price level, labeled PL1 Full employment output, labeled Yf Identify one action the central bank can take to help the economy recover from the recession. Draw a correctly labeled graph of the money market, and show the impact of the central bank’s action identified in part (b) on the nominal interest rate. On your graph for part (a), show the effect of the central bank’s action identified in part (b) on real output and the price level. Assume there is an increase in business confidence as a result of the central bank’s action. What will happen to the demand for capital goods? Draw a correctly labeled graph of the loanable funds market, and show the effect of the change identified in part (e)(i) on the real interest…Which of the following CANNOT be an explanation for the recession following the inverted yield curve: A The consumers are encouraged to put their savings in the bank instead of spending B The investors are selling stocks and buying long-term bonds C Companies are paying less interest for their long-term debt D The banks make less money from providing mortgage loans