Question

If a monetary authority uses inflation targeting of 1% to 2% per year, deflation calls for:
	a balanced budget. contractionary monetary policy. no change to monetary policy. quantitative easing.

An increase in the interest rate causes the aggregate _____ curve to shift _____.
	supply; leftward demand; leftward demand; rightward supply; rightward

When the interest rate falls, the value of the U.S. dollar in foreign exchange markets tends to _____ and net exports tend to _____.
	fall; decrease rise; decrease fall; increase rise; increase

To say that the Federal Reserve is transparent means that the Fed:
	has a “just trust us” approach to conducting monetary policy. executes decisions in secrecy. uses a monetary growth rule. is open regarding its monetary policy.

In the equation of exchange, if M = $1.5 trillion, V = 7, and P = 1.05, then:
	Q = $10.5 trillion. nominal GDP is $10 trillion. Q = $10 trillion. real GDP is $10.5 trillion.

Answer 1

Answer

1. quantitative easing.

For combating deflation , the central bank may choose to purchase long term securities from the market, increasing money supply in the economy.

2.supply; leftward
The money supply curve shifts to the left when interest rates increase.

3.fall; increase
When theres an increase i AD, the interest rates fall and this leads to people investing outisde of the US, increasing the money supply of USD. This makes US dollar fall in value and imports rise as US goods and services costs lesser than it previously did.

4.is open regarding its monetary policy.
The federal bak makes all its decisios and actions with public notifications in place.

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