a. Explain how the Central bank can change the money supply? (3 marks) b. Using appropriate...
a. Explain how the Central bank can change the money supply? (3 marks)
b. Using appropriate diagrams, critically analyse the short run and long run effect of a contractionary monetary policy on aggregate demand. (7 marks)
Homework Answers
Add Answer to:
a. Explain how the Central bank can change the money supply? (3
marks)
b. Using appropriate...
QUESTION 4 a. Explain how the Central bank can change the money supply? (3 marks) b....
QUESTION 4 a. Explain how the Central bank can change the money supply? (3 marks) b. Using appropriate diagrams, critically analyse the short run and long run effect of a contractionary monetary policy on aggregate demand. (7 marks)
2. Suppose the economy is in long-run equilibrium, with real GDP at $19 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases money supply by 6%. a) Illust...
2. Suppose the economy is in long-run equilibrium, with real GDP at $19 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases money supply by 6%. a) Illustrate the short-run effects of the monetary policy by using aggregate demand-aggregate supply model. Be sure to indicate the direction of change in real GDP, the price level and the unemployment rate. b) Illustrate the long-run effects of the monetary policy by using aggregate demand-aggregate supply model....
6) Using money supply-money demand and the interest rate parity relationship, show how the central bank...
6) Using money supply-money demand and the interest rate parity relationship, show how the central bank can maintain fixed exchange rates in the face of changes in output. 7) Using the DD-AA model under fixed exchange rates, show the effects of monetary policy. What are the main results? 8) Using the DD-AA model under fixed exchange rates, show the effects of fiscal policy. What are the main results? 9) Using the DD-AA model under fixed exchange rates, show the effects...
In an economy where the money supply and aggregate demand have been decreased by the Central...
In an economy where the money supply and aggregate demand have been decreased by the Central Bank, you know that the Central Bank is using 答案选项组 a contractionary monetary policy. an expansionary monetary policy. a loose monetary policy. follow expansionary fiscal policy How does monetary policy affect the market? 答案选项组 Monetary policy has a more of an impact on consumption than investment. Monetary policy has a more of an impact on government spending than investment. Monetary policy has an indirect...
Economics: 1) Why is it possible to change real economic factors in the short run simply...
Economics: 1) Why is it possible to change real economic factors in the short run simply by printing and distributing more money? 2) Explain why a stable 5% inflation rate can be preferable to one that averages 4% but varies between 1-7% regularly. 3) Explain the difference between active and passive monetary policy. 4) Suppose the economy is in long-run equilibrium, with real GDP at $16 trillion and the unemployment rate at 5%, Now assume that the central bank unexpectedly...
A central bank implements a contractionary monetary policy over worries that inflation will undermine further economic...
A central bank implements a contractionary monetary policy over worries that inflation will undermine further economic growth. Demonstrate the effect this policy has on the economy by shifting the aggregate demand (AD) curve in the appropriate direction Provide your answer below: Price Level Aggregate Supply Aggregate Demand Real GDP
1) of the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision...
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...
I. The economy of Zarland is operating below the full-employment level of output with a balanced budget. (a) Draw a correctly labeled graph of short-run aggregate supply, long-run aggregate supply, a...
I. The economy of Zarland is operating below the full-employment level of output with a balanced budget. (a) Draw a correctly labeled graph of short-run aggregate supply, long-run aggregate supply, and aggregate demand, and show each of the following. (Gi) The country's current equilibrium output and price level, labeled Yj and PL1. respectively (ii) The full-employment output, labeled Yf (b) Ir Zarland increases government expenditures and taxes by equal amounts, can aggregate demand increase? Explain. (c) If Zarland decides to...
Macroeconomic Multiple Choice Questions Answer All 10 Questions* 1) If the Central Bank of Kuwait puts...
Macroeconomic Multiple Choice Questions
Answer All 10 Questions*
1) If 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 full 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...
Using the AS-AD framework, explain how the economy adjusts to the change in money supply in...
Using the AS-AD framework, explain how the economy adjusts to the change in money supply in the long run. Return to the IS-LM framework and explain how the real interest rate and investment respond to the change in the long run. Compare the long-run eqm. before and after the change in money demand. How do long-run values of investment, consumption and national income compare before and after the policy change? Explain.
2. Suppose the economy is in long-run equilibrium, with real GDP at $19 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases money supply by 6%. a) Illustrate the short-run effects of the monetary policy by using aggregate demand-aggregate supply model. Be sure to indicate the direction of change in real GDP, the price level and the unemployment rate. b) Illustrate the long-run effects of the monetary policy by using aggregate demand-aggregate supply model....
6) Using money supply-money demand and the interest rate parity relationship, show how the central bank can maintain fixed exchange rates in the face of changes in output. 7) Using the DD-AA model under fixed exchange rates, show the effects of monetary policy. What are the main results? 8) Using the DD-AA model under fixed exchange rates, show the effects of fiscal policy. What are the main results? 9) Using the DD-AA model under fixed exchange rates, show the effects...
A central bank implements a contractionary monetary policy over worries that inflation will undermine further economic growth. Demonstrate the effect this policy has on the economy by shifting the aggregate demand (AD) curve in the appropriate direction Provide your answer below: Price Level Aggregate Supply Aggregate Demand Real GDP
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...
I. The economy of Zarland is operating below the full-employment level of output with a balanced budget. (a) Draw a correctly labeled graph of short-run aggregate supply, long-run aggregate supply, and aggregate demand, and show each of the following. (Gi) The country's current equilibrium output and price level, labeled Yj and PL1. respectively (ii) The full-employment output, labeled Yf (b) Ir Zarland increases government expenditures and taxes by equal amounts, can aggregate demand increase? Explain. (c) If Zarland decides to...
Macroeconomic Multiple Choice Questions
Answer All 10 Questions*
1) If 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 full 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...
Most questions answered within 3 hours.
-
Air at 222 °F flows at standard atmospheric pressure in a pipe
at a rate of...
asked 1 minute from now -
For eggplants, there are three colors (phenotypes) :
dark purple, light purple and white. A white...
asked 1 minute ago -
software testing
without making any changes to the java classes provided below,
come up with some...
asked 16 minutes ago -
The demand for a product is normally distributed with an average
daily demand of 90 units...
asked 32 minutes ago -
Modos Company has deposited $3,500 in checks received from
customers. It has written $1,400 in checks...
asked 37 minutes ago -
Lurch Company’s December 31, 2015, balance sheet follows:
Lurch Company Balance Sheet December 31, 2015
1...
asked 41 minutes ago -
The Acme Company manufactures widgets. The distribution of
widget weights is bell-shaped. The widget weights have...
asked 46 minutes ago -
Compare and contrast the growth, development, apex and decline
of the Greek and Roman civilizations. What...
asked 49 minutes ago -
Which of the following is NOT true about the VER?
A.
It always produces a loss...
asked 56 minutes ago -
Instructions: How might each of the following parts of the brain
be active while having a...
asked 56 minutes ago -
In 2020, an employee has annual gross salary of $86,000, annual
taxable income of $43,000 (before...
asked 59 minutes ago -
3. Describe, quantitatively, how you would make
250 mL of a 40 mM HEPES buffer at...
asked 59 minutes ago