Homework Answers
a) False, the expected inflation rate is the difference between real interest rate and nominal interest rate.
b) True, inflation can be used as used as a measure of expected inflation.
c) True, this will push the aggregate demand curve to the right and increase the price of the goods and services in the market.
d) False, it will decrease and shift the supply curve to the left.
e) False, the contractionary policy will increase the interest rate not decrease it.
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The statements refer to inflation expectations. Label each statement as either true or false. Each label...
The statements refer to inflation expectations. Label each statement as either true or false. Each label...
The statements refer to inflation expectations. Label each statement as either true or false. Each label will be used more than once. Expected inflation is equal to the nominal interest rate plus the real interest rate. The survey results of what economists think inflation will be can be used as a measure of expected inflation. If people expect the price level of goods and services to increase, aggregate demand (AD) increases. If people expect inflation with respect to the production...
Determine if each statement is true or false. True False Answer Bank Borrowers gain when inflation...
Determine if each statement is true or false. True False Answer Bank Borrowers gain when inflation is lower than expected, If inflation is higher than the nominal interest rate, the real interest rate is negative Loan contracts specify the nominal interest rate, Real interest rates will never go negative. Lenders gain when inflation is lower than expected,
Suppose government spending increases. True or False: The effect on aggregate demand would be larger if...
Suppose government spending increases.
True or False: The effect on aggregate demand would be larger if the Federal Reserve held the money supply constant in response than if the Fed were committed to maintaining a fixed interest rate.
True or False: The reasons for the downward slope of an aggregate demand curve include the real b...
True or False: The reasons for the downward slope of an aggregate demand curve include the real balances effect, the interest-rate effect, and the net exports effect. True O False Although the AD and market demand curves are both downward sloping, the two concepts are different because the AD curve deals with prices and a ー, while the market demand curve deals with prices and a For each scenario in the following table, indicate whether the aggregate demand curve will...
2. Assess each comment and either True, False, or Uncertain. Be sure to explain your response....
2. Assess each comment and either True, False, or Uncertain. Be sure to explain your response. (a.) “Typically speaking, one should expect that the federal funds rate will rarely be above the discount rate.” (b.) “By paying interest on reserve accounts, the Fed is limiting the effects of infation resulting from its balance sheet expansion during and after the Fnancial crisis.”
Using the information in this chapter, label each of the following statements true, false, or uncertain....
Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly. IF YOU ARE NOT GONNA ANSWER ALL OF THEM ABSTAIN FROM COMMENTING HERE. THANKS a.If the nominal exchange rate is fixed, the real exchange rate is fixed. b. When domestic inflation equals foreign inflation, the real exchange rate is fixed. c. A devaluation is an increase in the nominal exchange rate. d. Britain’s return to the gold standard caused years of high...
Statements True False When the Fed increases the money supply, short-term interest rates tend to dedine....
Statements True False When the Fed increases the money supply, short-term interest rates tend to dedine. Actions that lower short-term interest rates will always lower long-term interest rates. Long-term interest rates are not as sensitive to booms and recessions as are short-term interest rates. The Federal Reserve Board has a significant influence over the level of economic activity, inflation, interest rates in the United States
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,...
True False Answer Bank Borrowers gain when inflation is higher than expected. Loan contracts specify the...
True False Answer Bank Borrowers gain when inflation is higher than expected. Loan contracts specify the nominal interest rate. Real interest rates will never go negative. If inflation is higher than the nominal interest rate, the real interest rate is negative. Borrowers lose when inflation is higher than expected.
1. When the government increases spending by issuing more bonds, it causes: a) nations currency to...
1. When the government increases spending by issuing more bonds, it causes: a) nations currency to appreciate b)exports increase c)interest rates decrease d)demand for loanable funds decrease e)decreases merchandise trade deficit 2. When the Fed decreases money supply to combat inflation, it cuases: a)the price of the U.S. dollar to decrease b) capital to flow out of the US c)an increase in the merchandise trade deficit d)an increase in private spending e) a decrease in the interest rates 3. Which...
The statements refer to inflation expectations. Label each statement as either true or false. Each label will be used more than once. Expected inflation is equal to the nominal interest rate plus the real interest rate. The survey results of what economists think inflation will be can be used as a measure of expected inflation. If people expect the price level of goods and services to increase, aggregate demand (AD) increases. If people expect inflation with respect to the production...
Determine if each statement is true or false. True False Answer Bank Borrowers gain when inflation is lower than expected, If inflation is higher than the nominal interest rate, the real interest rate is negative Loan contracts specify the nominal interest rate, Real interest rates will never go negative. Lenders gain when inflation is lower than expected,
Suppose government spending increases.
True or False: The effect on aggregate demand would be larger if the Federal Reserve held the money supply constant in response than if the Fed were committed to maintaining a fixed interest rate.
True or False: The reasons for the downward slope of an aggregate demand curve include the real balances effect, the interest-rate effect, and the net exports effect. True O False Although the AD and market demand curves are both downward sloping, the two concepts are different because the AD curve deals with prices and a ー, while the market demand curve deals with prices and a For each scenario in the following table, indicate whether the aggregate demand curve will...
Statements True False When the Fed increases the money supply, short-term interest rates tend to dedine. Actions that lower short-term interest rates will always lower long-term interest rates. Long-term interest rates are not as sensitive to booms and recessions as are short-term interest rates. The Federal Reserve Board has a significant influence over the level of economic activity, inflation, interest rates in the United States
True False Answer Bank Borrowers gain when inflation is higher than expected. Loan contracts specify the nominal interest rate. Real interest rates will never go negative. If inflation is higher than the nominal interest rate, the real interest rate is negative. Borrowers lose when inflation is higher than expected.
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