Homework Answers
Option 4. The money supply curve would shift to the right
Explanation: With the rate cuts, the money supply curve would shift to the right.
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Question 17 (1 point) With the onset of the 2007-2008 Great Recession, the Fed, led by...
With the onset of the 2007-2008 Great Recession, the Fed, led by Fed Chairman Ben Bernanke...
With the onset of the 2007-2008 Great Recession, the Fed, led by Fed Chairman Ben Bernanke (2006- 2014), lowered its target interest rate (the federal funds rate) to a range of 0.00-0.25 percent. This was done with 7 rate cuts during 2008, after several in 2007. Consider the aggregate demand aggregate supply diagram below, which represents the macroeconomy. Suppose the market is initially at an equilibrium at point A. What effect will the Fed's actions have on this economy? LRAS:...
On March 15, 2017, Federal Reserve Chairman Janet L. Yellen announced the Federal Reserve was raising...
On March 15, 2017, Federal Reserve Chairman Janet L. Yellen announced the Federal Reserve was raising its benchmark rate (the federal funds rate) by a quarter of a percentage point (to a range of 0.75-1.00 percent). This was the third time the Fed has raised rates after the Great Recession. Consider the market for money illustrated in the figure below. Assume the market initially just prior to March 15, 2017) is in equilibrium at point A. Describe the effects of...
The financial crisis of 2008 and the eventual recession that occurred caused the Fed to take...
The financial crisis of 2008 and the eventual recession that occurred caused the Fed to take drastic monetary policy action. Which of the following best describes what they did? A. The Fed's action shifted the MP curve down to the right, which lead to the aggregate demand curve shifting to the right B. The Fed's action shifted the MP curve to the left, which lead to the aggregate demand shifting to the right C. The Fed's action caused movement along...
. The housing market has played a key role in understanding the Great Recession of 2007/2008...
. The housing market has played a key role in understanding the Great Recession of 2007/2008 through various channels. Which of the following plays a role? a) The housing market boom before the recession. b) The fall in house prices during the recession. c) The fall in consumption demand during the recession. d) All of the above.
1a) Suppose that after living through the great recession of 2007-2009, people decide to save a...
1a) Suppose that after living through the great recession of 2007-2009, people decide to save a greater percentage of their incomes. How do this impact the loanable funds market and the aggregate demand curve?? b) What is a shadow bank? How did Shadow bank contribute to the severity of the great recession?
Question 1 (1 point) An open market purchase of T-bills by the Fed will: have no...
Question 1 (1 point) An open market purchase of T-bills by the Fed will: have no effect on the money supply. decrease the money supply. increase the money supply. O increase the amount of government bonds held at banks. Question 2 (1 point) Contractionary monetary policy _____ interest rates, causing aggregate demand to shift to the lowers; right Olowers; left O raises; right Oraises; left Which of the following aggregate demand - aggregate supply models illustrates the short-run effects of...
When the Fed conducts an open market purchase, the Fed buys securities from banks and the...
When the Fed conducts an open market purchase, the Fed buys securities from banks and the money supply increases As a result of the open market purchase, the O A. 0 B. ° C. money demand curve will shift to the left. money supply curve will shift to the left. money supply curve will shift to the right. OD. money demand curve will tthe right The new equilibrium will be where O A. the new money supply curve intersects the...
What is financial stability? What actions has the Fed taken since 2007 in pursuit of financial...
What is financial stability? What actions has the Fed taken since 2007 in pursuit of financial stability? Use a graph to illustrate the effects of the Fed's actions. Financial stability is a situation in which ______. A. financial markets and institutions function normally to allocate capital resources and risk B. all stock market indices experience daily positive growth C. the real interest rate is less than 3 percent a year D. the nominal interest rate is less than 5 percent...
A stock market boom would shift the aggregate demand curve to the Right.To offset this change,...
A stock market boom would shift the aggregate demand curve to the Right.To offset this change, the Fed could increase the money supply. right. To offset this change, the Fed could decrease the money supply. left. To offset this change, the Fed could increase the money supply. left. To offset this change, the Fed could decrease the money supply. Other things the same, if the Fed increases the money supply, the interest rate rises so aggregate demand shifts right. rises...
5) The Great Recession beginning in 2007 was caused by a) The Federal Government reducing spending....
5) The Great Recession beginning in 2007 was caused by a) The Federal Government reducing spending. b) The rapid increase and subsequent decline in housing prices. c) Foreign countries reducing their demand for American Goods. d) Baby Boomers retiring from the economy. 6) Suppose that the economy is experiencing a recessionary gap. If you believe in "small government", then the most appropriate policy would be to a) Raise income taxes. b) Lower income taxes. c) Raise government spending. d) Lower...
With the onset of the 2007-2008 Great Recession, the Fed, led by Fed Chairman Ben Bernanke (2006- 2014), lowered its target interest rate (the federal funds rate) to a range of 0.00-0.25 percent. This was done with 7 rate cuts during 2008, after several in 2007. Consider the aggregate demand aggregate supply diagram below, which represents the macroeconomy. Suppose the market is initially at an equilibrium at point A. What effect will the Fed's actions have on this economy? LRAS:...
On March 15, 2017, Federal Reserve Chairman Janet L. Yellen announced the Federal Reserve was raising its benchmark rate (the federal funds rate) by a quarter of a percentage point (to a range of 0.75-1.00 percent). This was the third time the Fed has raised rates after the Great Recession. Consider the market for money illustrated in the figure below. Assume the market initially just prior to March 15, 2017) is in equilibrium at point A. Describe the effects of...
Question 1 (1 point) An open market purchase of T-bills by the Fed will: have no effect on the money supply. decrease the money supply. increase the money supply. O increase the amount of government bonds held at banks. Question 2 (1 point) Contractionary monetary policy _____ interest rates, causing aggregate demand to shift to the lowers; right Olowers; left O raises; right Oraises; left Which of the following aggregate demand - aggregate supply models illustrates the short-run effects of...
When the Fed conducts an open market purchase, the Fed buys securities from banks and the money supply increases As a result of the open market purchase, the O A. 0 B. ° C. money demand curve will shift to the left. money supply curve will shift to the left. money supply curve will shift to the right. OD. money demand curve will tthe right The new equilibrium will be where O A. the new money supply curve intersects the...
5) The Great Recession beginning in 2007 was caused by a) The Federal Government reducing spending. b) The rapid increase and subsequent decline in housing prices. c) Foreign countries reducing their demand for American Goods. d) Baby Boomers retiring from the economy. 6) Suppose that the economy is experiencing a recessionary gap. If you believe in "small government", then the most appropriate policy would be to a) Raise income taxes. b) Lower income taxes. c) Raise government spending. d) Lower...
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