Tightening monetary policy causes interest rates to __________ and aggregate demand to __________. Group of answer...
Tightening monetary policy causes interest rates to __________ and aggregate demand to __________.
Group of answer choices
rise / increase
fall / increase
rise / decrease
fall / decrease
Homework Answers
Tightening monetary policy means that money supply is reduced, this will cause interest rates to rise and as a result investment falls and aggregate demand reduces in the economy. Tightening monetary policy causes interest rates to rise and aggregate demand to decrease. The answer is option (c).
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Tightening monetary policy causes interest rates to __________
and aggregate demand to __________.
Group of answer...
An increase in the money supply causes: Group of answer choices interest rates to rise, investment...
An increase in the money supply causes: Group of answer choices interest rates to rise, investment spending to rise, and aggregate demand to rise interest rates to fall, investment spending to fall, and aggregate demand to fall interest rates to fall, investment spending to rise, and aggregate demand to rise interest rates to rise, investment spending to fall, and aggregate demand to fall
Give some examples of monetary policy that decrease aggregate demand. Examples of monetary policy that decrease...
Give some examples of monetary policy that decrease aggregate demand. Examples of monetary policy that decrease aggregate demand include O A. O B. O C. O D. a decrease in the quantity of money and an increase in interest rates a decrease in taxes and a decrease in interest rates an increase in taxes and a decrease in the quantity of money an increase in transfer paynents and an increase in interest rates Click to select your answer
Both monetary policy and fiscal policy affect aggregate demand. Group of answer choices True False
Both monetary policy and fiscal policy affect aggregate demand. Group of answer choices True False
Which of the following is NOT consistent with tightening of monetary policy? A. A central bank...
Which of the following is NOT consistent with tightening of monetary policy? A. A central bank sells more government securities to banks. B. The country’s foreign currency may increase in value. C. Interest rates fall. D. Bank lending is reduced. E. Open-market operations may reduce banks’ supplies of funds and liquidity in a financial system. Monetary policy is preferred to fiscal policy as a _______ policy instrument because it can be adjusted more _________ than fiscal policy. A. short-term, quickly....
6. (Problem 6) An economy is facing the inflationary gap shown in the accompanying diagram. Aggregate...
6. (Problem 6) An economy is facing the inflationary gap shown in the accompanying diagram. Aggregate price level LRAS SRAS Real GDP Potential —YpY output To eliminate the gap, should the central bank use expansionary or contractionary monetary policy? How will the interest rate, investment spending, consumer spending, real GDP, and the aggregate price level change as monetary policy closes the inflationary gap? The central bank can use contractionary monetary policy. The interest rate will rise, which would encourage a...
(1) Other things being equal, which of the following will increase aggregate expenditures? Group of answer...
(1) Other things being equal, which of the following will increase aggregate expenditures? Group of answer choices An increase in domestic prices relative to foreign prices A decrease in the interest rate A decrease in real wealth An increase in income taxes A decrease in government purchases of goods and services (2) If the current unemployment rate is 5 percent and the natural unemployment rate is 6 percent, then the economy is Group of answer choices producing a level of...
Beginning from a position of long-run equilibrium, an expansionary monetary policy by the Bank of Canada...
Beginning from a position of long-run equilibrium, an expansionary monetary policy by the Bank of Canada causes A) an increase in the level of potential output B) a fall in the general price level C) an increase in most market interest rates D) aggregate demand for goods and services to exceed potential output E) aggregate demand for goods and services to fall short of potential output
The crowding-out from expansionary fiscal policy causes real interest rates to (increase/decrease) investment to (decrease/increase) , and...
The crowding-out from expansionary fiscal policy causes real interest rates to (increase/decrease) investment to (decrease/increase) , and aggregate demand to shift (left/right),(decreasing/increasing) the overall impact of expansionary economic policy.
Which of the following is a monetary policy intended to rein in inflation? a. Reduce interest...
Which of the following is a monetary policy intended to rein in inflation? a. Reduce interest rates to increase investment spending b. Increase the money supply to shift the aggregate demand curve rightward c. Reduce the interest paid on banks' reserves d. Decrease the money supply to shift the aggregate demand curve leftward
Suppose the Bank of Canada implements monetary policy which results in an immediate increase in aggregate...
Suppose the Bank of Canada implements monetary policy which results in an immediate increase in aggregate demand of $12 Billion. If the spending multipler is 1.5 what would be the ultimate effect of this monetary policy on total economic output? a) it would rise by $1.5 billion b) it would fall by $12 billion c) it would rise by $18 billion d) no change e)it would fall by $18 billion
Give some examples of monetary policy that decrease aggregate demand. Examples of monetary policy that decrease aggregate demand include O A. O B. O C. O D. a decrease in the quantity of money and an increase in interest rates a decrease in taxes and a decrease in interest rates an increase in taxes and a decrease in the quantity of money an increase in transfer paynents and an increase in interest rates Click to select your answer
6. (Problem 6) An economy is facing the inflationary gap shown in the accompanying diagram. Aggregate price level LRAS SRAS Real GDP Potential —YpY output To eliminate the gap, should the central bank use expansionary or contractionary monetary policy? How will the interest rate, investment spending, consumer spending, real GDP, and the aggregate price level change as monetary policy closes the inflationary gap? The central bank can use contractionary monetary policy. The interest rate will rise, which would encourage a...
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