Suppose the Federal Reserve (the USA central bank) increases the money supply in the USA. What would be the effect of this monetary expansion in the USA on the Canadian GDP? Specifically, explain what happens to the Canadian net exports (hint: there is more than one way that the US monetary expansion influences the Canadian net exports, and you should try to describe & explain the overall impact).
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An increase in the Money Supply: Select one: O a. leads to a fall in prices and an increase in consumption, shifting the AD to the left O b.leads to an increase in net exports, shifting the AS to the right O c. leads to a fall in interest rates and a consequent increase in investment, shifting the AD to the right O d. none of the above if a country that is a trade partner of ours falls into...
An increase in the Canadian money supply would cause Canadian output to ________ and the Canadian net exports to ________ in the short run using a Keynesian model. A) rise; rise B) fall; rise C) rise; fall D) fall; fall
4) What happens to the value of the dollar if the European Central Bank (ECB) tightens its money supply and raises interest rates? How will this impact the value of the dollar, exports and imports, AD and GDP? 5) What are 5 financial innovations and deregulations that led to the financial crisis in 2008? What are 5 policy responses by the Federal Reserve and the U.S. Government and Treasury department that helped us to get out of the financial crisis?...
Problem #4 Consider a simple economy in which money supply (think of M1) is determined through actions of the central bank, non-bank public, and commercial banks. Assume that the central bank influences the size of the monetary base and the public and commercial banks decide on the value of deposits and excess reserves. i)Imagine that in a given point in time the value of the monetary base is equal to 100, the public chooses not to hold any currency, and...
Consider a simple economy in which money supply (think of M1) is determined through actions of the central bank, non-bank public, and commercial banks. Assume that the central bank influences the size of the monetary base and the public and commercial banks decide on the value of deposits and excess reserves. i) Imagine that in a given point in time the value of the monetary base is equal to 100, the public chooses not to hold any currency, and commercial...
QUESTION 4 In February 2014, South Africa had an inflation interest rates in January and is expected to increase or maintain the interest rates through 2014. The South African central bank is pursuing rate of 5.9 % and an unemployment rate of 24.1%. The South African central bank raised a(n): contractionary monetary policy to contain inflation. expansionary monetary policy to contain inflation. expansionary monetary policy to fight unemployment. contractionary monetary policy to fight unemployment QUESTION 5 When the economy is sluggish, the Fed will: raise interest rates, which...
1) Explain: Who has control of the money supply in the US Economy? What happens to the interest rate if the money supply increases or decreases and the demand for money remains unchanged? 2) What are the "Tools" of the Federal Reserve? How are they used to increase the money Supply? How are they used to decrease the money supply? When would you use these policies? No less than 150 words each
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...
need an answer to question 5 textbook is macroeconomics 9th edition to keep the money supply at its original level, does it culate, in dollars, how much the central bank . Explain how banks create money 5. What are the various ways in which the Federal 6. As a Case Study in the chapter discusses, the Reserve can influence the money supply? money supply fell from 1929 to 1933 because Why might a banking crisis lead to a fall in...
When the Fed increases the money supply through open market operations, it can take some time before the interest rate changes and new investment happens. • Is this an example of inside or outside lag? • Why does doesn't the monetary expansion change GDP instantly? Provide an example relating to either the bank, the borrower, or another party in the economy.