Ans) the correct option is c) if the weight the reserve bank places on inflation increases.
The steeper the central bank reaction function, the more the central bank increases the interest rate in respect to the current inflation rate being above the target inflation rate
Select one o a. if the weight the Reserve Bank places on the output gap increases...
When Bank A borrows federal funds from Bank B, the Federal Reserve bank increases one of the banks' accounts on the asset side of the Fed's balance sheet. b) Bank A posts an increase in its asset account, federal funds sold. c) Bank B posts an increase in its asset account, federal funds sold. the Federal Reserve bank increases the deposit account of both Bank A and Bank B. 24) Which of the following is not one of the five...
1. What occurs during a negative demand shock? Output increases and the price level decreases. Output and price level decrease. Output and price level increase. Output decreases and the price level increases. 2. In the equation of exchange, the term P × Q is the same as: the money supply. nominal GDP. national income. real GDP. 3. Expansionary monetary policy shifts the _____ curve to the _____. AD; right SRAS; left SRAS; right AD; left 4. The Taylor rule suggests...
Debiting accounts receivable Select one: O a. increases cash O b. decreases cash O c. increases accounts receivable d. decreases accounts receivable
"The money supply of an economy increases when the central bank simultaneously decreases the reserve requirement and sells government bonds in open market." Explain whether this statement is true, false or uncertain. (6 marks) What should money growth rate be if real output grows 4% per year, velocity grows 2% per year, and the central bank targets inflation to be 2% per year? (4 marks) What is the inflation tax? Explain. (6 marks) Explain (with the aid of diagrams) whether...
The Reserve Bank of Australia (RBA) purchases government bonds from an Australian bank. This transaction the monetary base and __ the money supply. (a) increases; increases (b) decreases; decreases decreases; leaves unchanged (d) increases; leaves unchanged (c)
An increase in the marginal propensity to consume Select one: a increases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. b. decreases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. C. increases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. d. decreases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. If many...
ed b. The money supply increases, decreases, remains constant): when the required reserve ratio increases. when the discount rate decreases. when the Fed sells securities. when the currency drain ratio increases. when the excess reserve ratio decreases. c. d. e. The table below shows the balance sheet in millions of dollars) for three banks. a. Suppose the required reserve ratio is 5 percent. Fill in the table. Bank of East Los Angeles Assets Liabilities Deposit: RR: $120 ER: Bank of...
The Hall-Petch equation shows that increasing grain size in metallic materials: Select one: O a. Increases strength O b. Reduces ductility O c. Decreases strength O d. Increases fracture toughness
If the current inflation is 2.5 %, the inflation gap in the Federal Reserve objective function will be a. 0.5% b. -0.5% c. 2% d. 3.5% e. need more information to decide -
If the Federal Reserve buys $40,000 worth of securities from the non-bank public, and the non-bank public then deposits the payment in their bank account, what happens next? a)R increases by $40,000 and the MB rises by $40,000 b)C and R both increase by $40,000, and MB increases by $80,000 c)C increases by $40,000 and the MB increases by $40,000 d)C decreases by $40,000 and the MB increases by $40,000