Homework Answers
9. To conduct monetary policy, Fed can buy government bonds in open market (expansionary monetary policy) or sell government bonds in open market (contractionary monetary policy).
Answer: option D
10. If the fed buys Government Bonds through open market operations, then it is demanding more bonds, which means demand for bonds in bond market increases.
Answer: option A
11. If the Fed purchases federal government bonds in open market in exchange for money, then bank reserves will increase which will increase the money supply in the economy.
Answer: option C
12. Expansionary monetary policy shifts the AD curve rightward and as a result both equilibrium price level and real GDP increase.
Answer: option A
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s whioh of the folowing is a tool used by the Fed in the oassiet of...
2 point 9. Which of the following is a tool used by the Fed in the...
2 point 9. Which of the following is a tool used by the Fed in the conduct of monetary policy? O A. changes in the prime rate O B. issuing new government bonds and retiring old ones O c. buying and selling corporate bonds O D. buying and selling federal government bonds 10. If the Fed buys government bonds through open-market operations, it 2 points will O A. Increase the demand for bonds in the bond market. O B. decrease...
Question 2 (3 points) Suppose the economy currently is in a recessionary gap. The Fed engages...
Question 2 (3 points) Suppose the economy currently is in a recessionary gap. The Fed engages in expansionary monetary policy. The impact of expansionary monetary policy will be to increase aggregate demand, increase prices, and increase real GDP - increase aggregate demand, increase prices, and decrease real GDP increase short-run aggregate supply, decrease in prices, and decrease in real GDP o increase short-run aggregate supply, decrease prices, and increase real GDP Page 2 of 30 Previous Page Next Page
Question 28 (3 points) Suppose the economy currently is in a recessionary gap. The Fed engages...
Question 28 (3 points) Suppose the economy currently is in a recessionary gap. The Fed engages in expansionary monetary policy. The impact of expansionary monetary policy will be to increase short-run aggregate supply, decrease prices, and increase real GDP increase aggregate demand, increase prices, and increase real GDP increase aggregate demand, increase prices, and decrease real GDP increase short-run aggregate supply, decrease in prices, and decrease in real GDP
Suppose the Fed wanted to engage in an expansionary monetary policy. Which of the following should...
Suppose the Fed wanted to engage in an expansionary monetary policy. Which of the following should it do? a. Increase the reserve requirement ratio. b. Buy bonds on the open market. c. Sell bonds on the open market. d. Lower taxes. e. Increase the discount rate. The interest rate at which banks can borrow funds from the Fed is known as… a. the federal funds rate. b. the discount rate. c. the prime rate. d. the real interest rate. e....
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...
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...
Suppose the Fed decides it needs to pursue an expansionary policy. Assume people hold no cash,...
Suppose the Fed decides it needs to pursue an expansionary policy. Assume people hold no cash, the reserve requirement is 20 percent, and there are no excess reserves. How would the Fed increase the money supply by $1 million through open market operations? O A. Because the current money multiplier is 5, the Fed would sell $200000 worth of bonds, increasing the monetary base and so increasing the money supply by $1000000 B. Because the current money multiplier is 5,...
24) Great Recession and Great Depression were similar except Stock Market crash High U...
24) Great Recession and Great Depression were similar except Stock Market crash High Unemployment Bad loans by banks Role of the Fed 25) The various kinds of automatic stabilizers are: Increased Defense spending All of them Expansionary Monetary Policy Taxes and Transfer payments 29) Internet Revolution in the 1990’s was an example of Negative Supply shock Positive demand shock Negative Demand shock Positive Supply shock 33) To close a recessionary gap, the Fed would increase the money supply increase interest...
24) Great Recession and Great Depression were similar except Stock Market crash High Unemployment Bad loans...
24) Great Recession and Great Depression were similar except Stock Market crash High Unemployment Bad loans by banks Role of the Fed 25) The various kinds of automatic stabilizers are: Increased Defense spending All of them Expansionary Monetary Policy Taxes and Transfer payments 29) Internet Revolution in the 1990’s was an example of Negative Supply shock Positive demand shock Negative Demand shock Positive Supply shock 33) To close a recessionary gap, the Fed would increase the money supply increase interest...
Explain the effect on the demand for reserves or the supply of reserves of the following...
Explain the effect on the demand for reserves or the supply of reserves of the following Fed policy action: an open market sale of government securities a. this would decrease the demand for reserves b. this would increase the supply for reserves c. this would decrease the supply for reserves d. this would lower the interest rate at which the supply for reserves becomes horizontal
2 point 9. Which of the following is a tool used by the Fed in the conduct of monetary policy? O A. changes in the prime rate O B. issuing new government bonds and retiring old ones O c. buying and selling corporate bonds O D. buying and selling federal government bonds 10. If the Fed buys government bonds through open-market operations, it 2 points will O A. Increase the demand for bonds in the bond market. O B. decrease...
Question 2 (3 points) Suppose the economy currently is in a recessionary gap. The Fed engages in expansionary monetary policy. The impact of expansionary monetary policy will be to increase aggregate demand, increase prices, and increase real GDP - increase aggregate demand, increase prices, and decrease real GDP increase short-run aggregate supply, decrease in prices, and decrease in real GDP o increase short-run aggregate supply, decrease prices, and increase real GDP Page 2 of 30 Previous Page Next Page
Question 28 (3 points) Suppose the economy currently is in a recessionary gap. The Fed engages in expansionary monetary policy. The impact of expansionary monetary policy will be to increase short-run aggregate supply, decrease prices, and increase real GDP increase aggregate demand, increase prices, and increase real GDP increase aggregate demand, increase prices, and decrease real GDP increase short-run aggregate supply, decrease in prices, and decrease in real GDP
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...
Suppose the Fed decides it needs to pursue an expansionary policy. Assume people hold no cash, the reserve requirement is 20 percent, and there are no excess reserves. How would the Fed increase the money supply by $1 million through open market operations? O A. Because the current money multiplier is 5, the Fed would sell $200000 worth of bonds, increasing the monetary base and so increasing the money supply by $1000000 B. Because the current money multiplier is 5,...
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