Macroeconomics: Principles, Problems, & Policies
20th Edition
ISBN: 9780077660772
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 16.5, Problem 1QQ
To determine
Objective of expansionary monetary policy .
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the minister of finance in conjunction with the south african reserve bank (SARB) and treasury decided to introduce expansionary monetary policy when the corona virus pandemic started, forcing hard lockdown of south africa. Discuss the purpose of expansionary monetary policy in the economy
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Q)Which of the following measures is an example of expansionary monetary policy?Reduction of property taxReduction of unemployment benefitsLowering inflationLowering the repo rate
Chapter 16 Solutions
Macroeconomics: Principles, Problems, & Policies
Ch. 16.1 - Prob. 1QQCh. 16.1 - Prob. 2QQCh. 16.1 - Prob. 3QQCh. 16.1 - Prob. 4QQCh. 16.5 - Prob. 1QQCh. 16.5 - Prob. 2QQCh. 16.5 - Prob. 3QQCh. 16.5 - Prob. 4QQCh. 16.5 - Prob. 1QQCh. 16.5 - Prob. 2QQ
Ch. 16.5 - Prob. 3QQCh. 16.5 - Prob. 4QQCh. 16.6 - Prob. 1QQCh. 16.6 - Prob. 2QQCh. 16.6 - Prob. 3QQCh. 16.6 - Prob. 4QQCh. 16 - Prob. 1DQCh. 16 - Prob. 2DQCh. 16 - Prob. 3DQCh. 16 - Prob. 4DQCh. 16 - Prob. 5DQCh. 16 - Prob. 6DQCh. 16 - Prob. 7DQCh. 16 - Prob. 8DQCh. 16 - Prob. 1RQCh. 16 - Prob. 2RQCh. 16 - Prob. 3RQCh. 16 - Prob. 4RQCh. 16 - Prob. 5RQCh. 16 - Prob. 6RQCh. 16 - Prob. 7RQCh. 16 - Prob. 8RQCh. 16 - Prob. 9RQCh. 16 - Prob. 1PCh. 16 - Prob. 2PCh. 16 - Prob. 3PCh. 16 - Prob. 4PCh. 16 - Prob. 5PCh. 16 - Prob. 6PCh. 16 - Prob. 7P
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- The following is TRUE about monetary policy EXCEPT, A) It uses interest rate and money supply as monetary tools. B) It manages the creation and flow of money and credit in the economy. C) It relates to revenue and expenditure by government budget. D) It aims to control the money supply and regulate the monetary sector.arrow_forwardWhich measure is a deflationary monetary policy measure? Pick a,b,c, or d A) A deliberate reduction by the government of its budget deficit B) A sale of government securities by the central bank C)A deliberate reduction by the central bank of its rate of interest D) A sale of state owned enterprises to the private sectorarrow_forwardMonetary policy is difficult to conduct because A. the tools available don't work. B. politicians frequently block the policy's intended outcomes. C. the interest rate always rises. D. the monetary policy transmission process is long and drawn out. E. it takes several years for the real GDP growth rate to respond to a change in the interest rate.arrow_forward
- A policy that results in slow and steady growth of the money supply is an example of A-an “easy” monetary policy. B-a “passive” monetary policy. C-a “practical” monetary policy. D-an “active” monetary policy.arrow_forwardIn the short run, which of the following is the most likely effect of an unanticipated move to expansionary monetary policy? a. An improvement in technology, which will stimulate growth in the long run b. A decrease in prices proportional to the increase in the money supply c. An increase in real outputarrow_forwardDiscuss the concept of "monetary policy". Explain the types of monetary policies and the means to effect themarrow_forward
- What kind of Monetary Policy could the Federal Reserve Board use to fix an economic situation where: Unemployment is at 6% and has increased steadily the last 6 months. GDP growth fell to 0.2% last quarter, and is expected to be negative this quarter.arrow_forwardMonetary policy isn’t always effective: Why couldn’t monetary policy pull us out of the Great recession? The Great Recession officially lasted from December 2007 to June 2009. But the effects lingered on for several years thereafter, with slow growth of real GDP and high unemployment rates. These effects all occurred despite several doses of expansionary monetary policy. Not only did the Fed push short-term interest rates to nearly 0%, but it also engaged in several rounds of quantitative easing, purchasing hundreds of billions of dollars’ worth of long-term bonds. Therefore, what are three possible reasons why monetary policy was not able to restore expansionary growth during and after the Great recession?arrow_forward•Suppose you are the governor of the Central Bank, and you carry out an inflation targeting policy. If the inflation rate seems to be above your announced target, •What kind of monetary policy you should follow to achieve the target? Show on an appropriate diagram. •What would be the effects of this policy on the economy in the short-run? Show on an appropriate diagram.arrow_forward
- The central bank of Barbados decides to pursue anexpansionary monetary policy. (i) Identify one possible action they could take. (ii) Carefully explain, in as much detail as possible, how the chosen action will impact the money market. (iii) Illustrate the overall impact of the chosen action on the money market.arrow_forwardIf the demand for money increases and the monetary authorities want interest rates to remain unchanged, which of the following would be appropriate policy? Select one: a. raise the desired reserves b. sell securities to the households. c. buy bonds in the open market d. increase the bank rate e. recall currency from circulationarrow_forwardExplain three tools of monetary policy from central bank and how these tools increase and decrease the money supply!arrow_forward
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