ZuoTi.Pro
Question

hich one of these policies should the Fed engage in if unemployment is 12% and inflation...

hich one of these policies should the Fed engage in if unemployment is 12% and inflation is 1.0%?

Select one:

a. Issue new government bonds and increase government borrowing

b. Lower income and corporate taxes

c. Increase government spending on infrastructure

d. Buy bonds through an Open Market Operation

e. Target a higher Federal Funds Rate

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

D

As given that unemployment rate is very high (12%) and inflation rate is lower in the range of 1%, thus this clearly means that period of recession is going on. The current requirement of the economy is to be pumped in by money , increased spendings in infrastructure , lowering of taxes.

However reducing taxes and increasing government spendings is the prerogative of US Government not Fed. What Fed can do is to buy bonds through an Open Market Operation so that Fed can pump in money in the market so that investment increases and money circulation again picks up the speed thus improving investment and economic growth thus directly impacting job creation.

0 0
Add a comment
Know the answer?
Add Answer to:
hich one of these policies should the Fed engage in if unemployment is 12% and inflation...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Which one of these policies should the Fed engage in if unemployment is 9% and inflation...

    Which one of these policies should the Fed engage in if unemployment is 9% and inflation is 1.5%? Select one: a. Issue new government bonds and increase government borrowing b. Sell government bonds through an Open Market Operation c. Increase discretionary government spending d. Raise the Required Reserves Ratio e. Target a lower Federal Funds Rate

  • If unemployment is 4% and inflation is 4%, which of the following is a keynesian economistely...

    If unemployment is 4% and inflation is 4%, which of the following is a keynesian economistely to advocate? Select one a. Increase government spending b. Increase income tax c. Target a lower Federal Funds Rate d. Sell bonds through an Open Market Operation e. Do nothing Assuming that banks lend all of their access reserves and people deposit all of their money, what will the Fed have to do in order to decrease the supply of money by $40 billion...

  • Suppose the Fed wanted to engage in an expansionary monetary policy. Which of the following should...

    Suppose the Fed wanted to engage in an expansionary monetary policy. Which of the following should it do? a. Increase the reserve requirement ratio. b. Buy bonds on the open market. c. Sell bonds on the open market. d. Lower taxes. e. Increase the discount rate. The interest rate at which banks can borrow funds from the Fed is known as… a. the federal funds rate. b. the discount rate. c. the prime rate. d. the real interest rate. e....

  • The government can reduce inflation with the help of both fiscal and monetary policy.

    The government can reduce inflation with the help of both fiscal and monetary policy. An effective combination of these policies to reduce inflation would be to _______ and _______ Increase taxes; lower the reserve requirement ratio Increase taxes; sell government bonds Decrease taxes; buy government bonds Decrease government spending; lower discount rate

  • IS-LM What combination of policies would best reduce inflation? a) Increase taxes, sell government bonds b)...

    IS-LM What combination of policies would best reduce inflation? a) Increase taxes, sell government bonds b) Decrease taxes, buy government bonds c) Decrease taxes, lower the reserve ratio d) Decrease government spending, lower the discount rate e) Increase government spending, raise the discount rate Use the IS-LM model. Your policy instruments are: Taxes, Government Spending, and the Money Supply. Describe a policy or set of policies that achieve the following objectives. Your answer should include a diagram to show how...

  • 1.What could the Federal Reserve have done to fight the Great Depression? a.Increase the money supply...

    1.What could the Federal Reserve have done to fight the Great Depression? a.Increase the money supply to reduce the interest rate. b.Increase the money supply to raise the interest rate. c.Decrease the money supply to reduce the interest rate. d.Decrease the money supply to raise the interest rate. 2. How could the government have used fiscal policy to fight the Great Depression? a.Reduce taxes, raise transfers, raise government purchases. b.Reduce taxes, reduce transfers, reduce government purchases. c.Raise taxes, reduce transfers,...

  • 1) Under inflation targeting, a central bank must pursue policies that Select one: A. keep the...

    1) Under inflation targeting, a central bank must pursue policies that Select one: A. keep the inflation rate within a specific target range. B. keep the inflation rate at a target value of zero. C. keep the inflation rate above some specific target value. D. lower the inflation rate, provided this can be done without raising the unemployment rate above a specified target value. 2) If the desired intermediate target is an interest rate, then the preferred operating target will...

  • Assume unemployment is high and is a major problem in the United States. In an effort...

    Assume unemployment is high and is a major problem in the United States. In an effort to get unemployment back to its natural rate, the Federal Reserve enacts an expansionary monetary policy by purchasing $10 million in U.S. Treasury bonds. If the reserve ratio is 10 percent, what is the maximum increase in money supply that may occur as a result of the Fed’s open market operation? Give one reason why money supply may not increase by the amount given...

  • What are the three main tools the Federal Reserve (Fed) has at its disposal to carry out monetary policy? setting...

    What are the three main tools the Federal Reserve (Fed) has at its disposal to carry out monetary policy? setting the discount rate, increasing taxes, and building highways conducting open market operations, increasing spending by the federal government, and decreasing taxes conducting open market operations, setting the discount rate, and paying interest on reserves O paying interest on reserves, conducting open market operations, and controlling money demand During the financial crisis of 2007-2008, the Fed engaged in lending to certain...

  • 1. Assume unemployment is high and is a major problem in the United States. (a) In...

    1. Assume unemployment is high and is a major problem in the United States. (a) In an effort to get unemployment back to its natural rate, the Federal Reserve enacts an expansionary monetary policy by purchasing $10 million in U.S. Treasury bonds. i. If the reserve ratio is 10 percent, what is the maximum increase in money supply that may occur as a result of the Fed's open market operation? Answer: ii. Give one reason why money supply may not...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT