Which of the following would be classed as an expansionary monetary policy? O A. A decrease in the quantity of money. O B. A decrease in interest rates. С. An increase in government taxation. O D. An increase in government expenditure. ОЕ. An increase in VAT.
Q: An overly expansionary monetary policy leads, in general, to: a. High inflation O b. High…
A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…
Q: Contractionary monetary policy would most likely be used to stabilize an economy in O A. Panel (a)…
A: Monetary Policies:- A Central bank generally regulates the market through monetary policies, the…
Q: ng recession
A: Monetary policy involves the actions being undertaken by the central bank of a nation in order to…
Q: Suppose that government spending is increased at thesame time that an autonomous monetary policy…
A: Aggregate Demand (AD) is the economic measure that measures the total amount of demand in the entire…
Q: In the 1970s, in response to recessions caused by an increase in the price of oil the central banks…
A: The monetary policies are used by the central bank to achieve certain economic goals. The main…
Q: The monetary growth rule is a plan for increasing the quantity of money O at a rate which increases…
A: According to Milton Friedman, the central bank (monetary policy) should be guided by fixed rather…
Q: Answer he que Dollar/euro exchange rate, Eye Eye Dollar return Dollar return 2 2' Ee 4' Expected…
A: Given, Initial money supply in the US is M1US Initial price level in the US is P1US Equilibrium…
Q: The hysteresis hypothesis believes that. O a. Money is neutral in the long run. O b. An economy…
A: Economic growth and business cycles have traditionally been considered independently. The dependency…
Q: One of the major roles of the central hank is to influence monetary variables such as inflation,…
A:
Q: Do you think tight monetary policy and reduced government spending is appropriate policy of IMF for…
A: Inflation refers to the rise in price level in the economy. Inflation is mostly the result of…
Q: a Suppose the central bank sells government securities to a commercial bank. will the money supply…
A: Open market operations refer to when the central bank buys and sells government securities from the…
Q: At the end of 2021, the Federal Reserve took an inventory of its foreign currency reserves. Since…
A: Net capital outflow or NCO refers to the net flow of funds that are invested abroad by a country at…
Q: Refer to table below. Suppose that the Fed had decided to set the US. money supply in December 1932…
A: Reserve deposit ratio (rdr) is the proportion of the total deposits commercial banks keep as…
Q: Considering that the Philippine Peso merely fiat money, and considering that we are affected by the…
A: Introduction Philippines economy has considered one of the fastest growing economy of Asia. It has…
Q: Assume that the monetary base (B) is $100 billion, the reserve-deposit ratio (m) is 0.1, and the…
A:
Q: Following political tensions, Germanys marginal propensity to import from Russia is likely to…
A: IS curve refers to the investment saving curve. It shows all such combinations of interest rates and…
Q: Which of the following sequence of events follows an expansionary monetary policy? A) rt =It = ADI…
A: A). An expansionary monetary policy means increasing the money supply in the economy faster than…
Q: If desired investment spending is relatively sensitive to changes in interest rates, then monetary…
A: Monetary Policy:- The monetary policy can be defined as central bank's macroeconomic policy. It is a…
Q: Question: Expansionary monetary policy with flexible ER will result in LM to shift . ., currency to…
A: In the international market, any change in the money supply will have a significant impact on the…
Q: If desired investment spending is relatively sensitive to changes in interest rates, then monetary…
A: Monetary Policy is the government policy which helps to maintain economic stability by changing the…
Q: What is the basic objective of monetary policy? What are the major strengths of monetary policy? Why…
A: The monetary policy is used by the monetary authority or the central bank of the nation. There are…
Q: Which of the following sequences of events is accurate? a. Contractionary monetary policy -->…
A: In contractionary/tight monetary policy, Ms(money supply) is decreased. As a result, the r(rate of…
Q: Many economists are worried that a high level of budget deficits may lead to inflationary monetary…
A: The budget is the estimation of the coming financial year revenues of the government as well as the…
Q: Consider Kharkeez, a hypothetical country that produces only burritos. In 2019, a burrito is priced…
A: Monetary neutrality says that any changes in money supply(MS) only have an impact on the nominal…
Q: Explaih the impact oh thé NeW Zedlahd ew Zei onomy with a decrease in interest rates in the S. (In…
A: The relationship between an economy's interest rate, and production is depicted by the…
Q: c. Let us summarize. Suppose the exchange rate depreciates due to a lower demand for Canadian…
A: Aggregate demand = Consumption + Government spending + Investment + Net exports If net exports…
Q: QUESTION 11 Increasing the interest rates is an expansionary monetary policy. O True False
A: Monetary policy refers to the policy of the central bank under which it uses policy instruments to…
Q: Suppose that the Federal Reserve conducts an open market sale. Everything else, including the…
A: Demand for U.S assets would increase and dollar would appreciate.
Q: Below is the list of internal factors in macroeconomy except a. Inflation rate b. Gross domestic…
A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…
Q: When the Fed raises the federal funds rate, the US dollar and net exports O a. appreciates;…
A: Federal funds rate is the interest charged on the borrowing and lending transaction between banks…
Q: . An economy is facing the recessionary gap shown in the accompanying diagram. To eliminate the gap,…
A: Recessionary gap: The recessionary gap generally occurs when there is a gap between countries real…
Q: he hysteresis hypothesis believes that... a. The path of an economy's real GDP can influence its…
A: In economics, there are various hypothesis used by economists to explain different economic…
Q: in the country of Juventus, the money supply is equal to $52 blionj the welocity of orcuation is 5,…
A: here we calculate the price level and nominal GDP by using the given information and conclude the…
Q: (a) Suppose the government of a country has run large budget deficits for several years in attempt…
A: When government raises its budget deficit in order to increase output, it leads to a rise in the…
Q: Consider the countries of Cyprus and Lithuania, both of which are part of the European Union and use…
A: The general increase in the level of prices in the economy depicts the situation of inflation. A…
Q: The frequency with which bills are passed within an economy is also known as the: velocity of money…
A: Money refers to the commodity that can be used as a store of value and at the same time it acts a…
Q: B. Elaborate on how the following monetary policies can be used as a tool to mitigate the impact on…
A: The economies around the globe are involved in various decision, and policy making activities. The…
Q: 2) a) What is monetary policy in open economies? b) Explain IS-LM analysis and understanding of…
A: As economies and societies developed, the study of economics got more complicated. Hence, as a…
Q: Following political tensions, Germany's marginal properisity decrease and its IS curve is likely to…
A: The equilibrium interest rate and price level are determined by the intersection of the IS and LM…
Q: S 5 Despite gradual recovery from the Covid crisis, inflation in Japan remains below the Bank of…
A: Monetary Policy is the act of the central bank of a country to manage and regulate the money supply…
Q: Suppose the Federal Reserve purchases $1,000,000worth of foreign assets.a. If the Federal Reserve…
A: Liabilities Amount ($) Assets Amount($) Currency in circulation 1,000,000 Foreign assets 1,000,000
Q: Suppose the economy experiences a recessionary gap. Expansionary monetary policy will, interest…
A: An economy is in equilibrium when aggregate demand is equal to the aggregate supply. A recessionary…
Q: The goal of U.S. monetary policy, as conducted by the Federal Reserve (the Fed), is to stabilize the…
A: If there is a recession or slow economy then use expansionary policy by increaseing money supply and…
Q: Answer the question according to the graph below. Dollar/euro exchange rate, Ese Ese Dollar return…
A: When the money supply increases, incomes rise, prices increase, and people expect inflation to…
Q: QUESTION 3 How are purchases or sales of foreign currency by a central bank are related to monetary…
A: In the international market, Central Bank can intervene in the market by making purchase or sale of…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- D) what kind of monetary policy might be helpful to stabilize the economy ( expansionary or contractionary)? E) what specific monetary policy tools does the federal reserve have available to use in this scenario? F) explain in detal, how should the federal reserve use each ofthese tools to maximize their effect in stabilizing the economy, what will be the likely effect of each monetary tool's use on the money supply , and the resulting impact on the economyWhich monetary policy tool can the Federal Reserve use to conduct an expansionary monetarypolicy (please state at least one instrument)? Which monetary policy instrument can the Fed useto conduct a restrictive monetary policy? Assume the country is experiencing highunemployment and a recession, such as during 2001, 2008-2009, and 2020. What is the Fedlikely to do in this scenario? Discuss the effects of such policy on the economy. Can you givea specific example to what the Fed did during any of those recessions? This is not a writing, it is economic.suppose that the money supply and the nominal GDP are $100 billion and $500 billion, repsectively. If the central bank reduces the money supply by $10 billion, by how much wil the nominal GDP have to fall to restore equilibrium, according to the monetarists perspective?
- Suppose that the reserve requirement for checkingdeposits is 10 percent and that banks do not hold anyexcess reserves.a. If the Fed sells $1 million of government bonds,what is the effect on the economy’s reserves andmoney supply?b. Now suppose that the Fed lowers the reserverequirement to 5 percent but that banks chooseto hold another 5 percent of deposits as excessreserves. Why might banks do so? What is theoverall change in the money multiplier and themoney supply as a result of these actions?Suppose that the money demand function is(M/P)d = 1,000 - 100r, where r is the interest rate in percent. Themoney supply M is 1,000 and the price level Pis 2.a. Graph the supply and demand for real moneybalances.b. What is the equilibrium interest rate?c. Assume that the price level is fixed. Whathappens to the equilibrium interest rate if thesupply of money is raised from 1,000 to 1,200?d. If the Fed wishes to raise the interest rate to7 percent, what money supply should it set?. Assume that the monetary policy curve is given byr = 1.5 + 0.75p.a. Calculate the real interest rate when the inflation rateis 2%, 3%, and 4%.b. Draw a graph of the MP curve, labeling the pointsfrom part (a).c. Assume now that the monetary policy curve is givenby r = 2.5 + 0.75p. Does the new monetary policycurve represent an autonomous tightening or loosening of monetary policy?d. Calculate the real interest rate when the inflation rateis 2%, 3%, and 4%, and draw the new MP curve,showing the shift from part (b).
- Occasionally, the Federal Open Market Committee (FOMC)sets a policy designed to “track” the interest rate. This meansthat the FOMC is pursuing policies designed to keep the interestrate constant. If, in fact, the Fed were acting to counter anyincreases or decreases in the interest rate to keep it constant,what specific actions would you expect to see the Fed take if thefollowing were to occur? (In answering, indicate the effects ofeach set of events on Y, C, S, I, Ms, Md, and r.)a. An unexpected increase in investor confidence leads to asharp increase in orders for new plants and equipment.b. A major New York bank fails, causing a number of worried peo-ple (not trusting even the FDIC) to withdraw a substantialamount of cash from other banks and put it in their cookie jarsSuppose that an economy has a constant nominal money supply, a constant level of real output Y = 1500, and a constant real interest rate r = 0.05, and it’s expected rate of inflation is 2%, i.e, πe = .02. Suppose that the income elasticity of money demand is ηY = 0.5 and the interest elasticity of demand ηi = –0.2. (a) Suppose that Y decreases to 1425, r remains constant at 0.05 and there is no change in the expected rate of inflation. What is the percentage change in the equilibrium price level? (b) Suppose that r increases to 0.06 and Y remains at 1500. Assuming that expected inflation remains at πe = .02, what is the percentage change in the equilibrium price level? (c) Suppose that r increases to 0.06. Assuming that πe = .02, what would real output have to be for the equilibrium price level to remain at its initial value?What is the advantage of monetary policy over fiscal policy? O. Monetary policy can be implemented faster than fiscal policy O. Once implemented, the effect of monetary policy can be realized faster than fiscal policy O. The monetary policy affecting Investment category, which is more flexible than the Consumption and Government expenditure category O. Monetary policy is more effective at reducing the recessionary/inflationary gap
- 1. Which of the following is concerned with changing the aggregate demand of thenation?A) External balanceB) Internal balanceC) Expenditure-changing policiesD) Expenditure-switching policiesAnswer: 2. Which of the following is an example of an expansionary monetary policy?A) Increase in TaxesB) Increase in the nation's money supplyC)Increased government expendituresD) Reduction in taxesAnswer:Explain why it is not possible for growing economies to have price stability whenthe money supply is constantplease explain each question 1. What effect a selling bond will have on the money market? Explain using bond prices. 2. Assume that fiscal policy can be accomplished by changing only one of G and T. In the IS-LM framework, suppose the effect on the general equilibrium output is the same between expansionary fiscal policy and expansionary monetary policy. Which one would you expect to have a greater impact on the equilibrium consumption? Explain in words. Hint: Monetary policy affects also affects Y in the IS-LM framework!