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- Why does an increase in the
required reserve ratio or in the currency drain decrease the magnitude of the money multiplier? - How does the Fed keep the public informed about the state of the economy and
monetary policy decisions? - Describe the Federal budget process and explain the effects of fiscal policy?
- Discuss the long-term issues with the US income inequality levels for the US economy.
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- In what ways does the Fed utilize their monetary policy tools to affect or counter-balance fiscal policy?Respond to the following in a minimum of 175 words: Explain the chain of events that occurs for expansionary and contractionary monetary policy to affect the long-run equilibrium level of real gross domestic product (GDP). Compare and contrast expansionary and contractionary fiscal policy.TRUE FALSE The more the Fed accommodates shocks to money demand, the larger the (government) spending multiplier.
- Assume that the prevailing interest rate in this economy is 6%. If the central bank decides to reduce the interest rate to 4% then: (a) This is contractionary monetary policy action and the price of exports would increase; (b) This is expansionary monetary policy and exports would increase; (c) This is expansionary fiscal policy and imports will increase; (d) This is contractionary monetary policy and imports will decrease.Describe the Fiscal Policy and the monetary policy and explain how The two policies are used to control money supply in the economy.Targeting the federal funds rate ( is, is not ) as important a tool today as it was before the 2007-2009 financial crisis. During the financial crisis when the federal funds rate was near zero, the Fed ( did, did not ) wish to go lower than zero and came up with alternatives to influence interest rates and lending: the administered rates. Today, the Fed still sets a target for the federal funds rate but finds it more effective to change the administered rates. By doing that, the Fed can stimulate or restrict lending. The federal funds rate is the Feds policy rate and (is, is not ) useful when providing forward guidance. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- The economy is at full employment, with fairly low levels of unemployment and inflation. What is likely to happen to GDP, unemployment, interest rates, and inflation if: d) the government increases its deficit at the same time that the Fed is reducing the money supply. e) the government increases its surplus at the same time that the Fed is increasing the money supplyExplain each of these statements supported by reasonable reasoning: 1. Credibility is important in the implementation of Monetary Policy. 2. Fiscal Policy is difficult to be implemented as it involves inside and outside lags.Use demand and supply analysis to explain why an expectation of Fed rate hikes would cause Treasury prices to fall.
- The Federal Reserve System’s Board of Governors and the Federal Government both maintained contractionary monetary and fiscal policies during the last economic expansion. For the purposes of this essay, assume that recent economic data shows that the economy is still growing at a fast rate. Identify and explain in detail the three monetary policy tools that the Board of Governors could use to fix this rapid expansion and the two fiscal policy tools that the Federal Government could adopt Please answer correct explain please asap please Don't answer by pen paper plz.I. Identification__________1. Shows combination of interest rates and the levels of output such that planned spending equals income.__________2. Monetary policy characterized by a decrease in money supply that results to a higher interest rate.__________3. Shows all combinations of interest rates and levels of income such that the demand for real balances is equal to the supply.__________4. It occurs when expansionary fiscal policy causes interest rates to rise, thereby reducing private spending, particularly investment.__________5. A policy on the regulation of the supply of money in the circulation.__________6. The policy of the government with regard to the level of government purchases, the level of transfers and the tax structures.II. Modified TRUE or FALSE: Write TRUE if the statement is correct and if the statement is false, choose the word or group of words that makes the statement false and write the correct word or group of words to make the statement correct.1. The lower the…What is the reason why fiscal policy should be in tune with monetary policy when the economy is in the recession phase? What is the importance of the Central Bank in the financial market?