Assume that a central bank attempts to lower the expected inflation by making its monetary policy...
Assume that a central bank attempts to lower the expected inflation by making its monetary policy more conservative. How would its decision to attempt to lower the domestic money supply affect the value of the domestic currency on the foreign exchange market, in both short and longer run
Homework Answers
The value of currency would appreciate in foreign exchange market due to reduction on money supply in short run.
In long run, both the money supply of domestic currency and its value in foreign exchange market would attain equilibrium due to the affect of market forces.
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Assume that a central bank attempts to lower the expected
inflation by making its monetary policy...
The sum of currency and bank deposits at the central bank is called: a. the money...
The sum of currency and bank deposits at the central bank is called: a. the money supply. b. domestic assets. c. the monetary base. d. fractional reserves. Official intervention in the foreign exchange market to defend a fixed exchange rate when the value of the country's currency is under downward pressure causes a. international reserve holdings to rise. b. a downward pressure on the country's interest rates. c.an increase in the liabilities of the central bank. d. the domestic money...
Describe the effects of contractionary monetary policy by the domestic central bank on output, the real...
Describe the effects of contractionary monetary policy by the domestic central bank on output, the real interest rate, and net exports in both the domestic and foreign country, using a Keynesian model in the short run. What happens in the long run? (Word Limit: 100 words)
52. Studying alternative theories of how people form expectations is particularly relevant to monetary policy because...
52. Studying alternative theories of how people form expectations is particularly relevant to monetary policy because A. if people fully expect inflation to occur, the effects of monetary policy are more widespread. monetary policy can only have real effects on the economy if people fully expect inflation. c. unexpected inflation cause prices to be flexible. d. the effects of expected inflation are completely different from the effects of unexpected inflation e expected inflation causes prices to become sticky. 53. Monetary...
1) of the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision...
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Suppose a country wants to maintain its exchange rate at the current level, but it is...
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For the past decade, central banks around the world have adopted very expansionary Monetary Policy in...
For the past decade, central banks around the world have adopted very expansionary Monetary Policy in order to decrease the key policy rate of interest by increasing the growth in the domestic Money Supply, MS in order to stimulate domestic economic activity. Some commentators have been concerned about such policy resulting in higher rates of Inflation in the future as a result of the ‘Quantity Theory of Money.’ Using the Equation of Exchange, MSV0 = PYP: (1) The significance or...
Which of the following is NOT consistent with tightening of monetary policy? A. A central bank...
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17 18 QUESTION 17 Suppose a country's central bank announces that it is decreasing the long-run...
17 18
QUESTION 17 Suppose a country's central bank announces that it is decreasing the long-run money growth rate to tame inflation. The country's currency will suddenly and its rate of depreciation will then O appreciate; rise O depreciate; rise appreciate; fall O depreciate; fall QUESTION 18 A balance of payments crisis is OA a sharp change in interest rates sparked by a change in expectations about the level of exports. ов. a sharp change in foreign reserves sparked by...
Suppose that the central bank carries a brief expansionary monetary policy and at the same time...
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In general, any central bank has two alternative approaches for implementing its monetary policy. These alternatives...
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The sum of currency and bank deposits at the central bank is called: a. the money supply. b. domestic assets. c. the monetary base. d. fractional reserves. Official intervention in the foreign exchange market to defend a fixed exchange rate when the value of the country's currency is under downward pressure causes a. international reserve holdings to rise. b. a downward pressure on the country's interest rates. c.an increase in the liabilities of the central bank. d. the domestic money...
52. Studying alternative theories of how people form expectations is particularly relevant to monetary policy because A. if people fully expect inflation to occur, the effects of monetary policy are more widespread. monetary policy can only have real effects on the economy if people fully expect inflation. c. unexpected inflation cause prices to be flexible. d. the effects of expected inflation are completely different from the effects of unexpected inflation e expected inflation causes prices to become sticky. 53. Monetary...
1) of the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision is based on A) the fact that the economy is at ful employment B) Expectation of excessive inflation in the future C) the fact that the economy is in an expansion D) Unemployment level is high 2) When the interest rate is set at a very low rate A) the opportunity cost of holding money is very low B) the money demand will shift...
17 18
QUESTION 17 Suppose a country's central bank announces that it is decreasing the long-run money growth rate to tame inflation. The country's currency will suddenly and its rate of depreciation will then O appreciate; rise O depreciate; rise appreciate; fall O depreciate; fall QUESTION 18 A balance of payments crisis is OA a sharp change in interest rates sparked by a change in expectations about the level of exports. ов. a sharp change in foreign reserves sparked by...
In general, any central bank has two alternative approaches for implementing its monetary policy. These alternatives are O A. targeting the money supply or pursuing a stabilization policy OB. targeting the money supply or choosing an output-gap target. O c. choosing an exchange-rate target or shortening long and variable lags. O D. choosing an output-gap target or targeting the interest rate O E. targeting the money supply or targeting the interest rate
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