Is fixed investment by private firms is sensitive to monetary policy?
Is fixed investment by private firms is sensitive to monetary policy?
WEEK 6: MONETARY POLICY AND FISCAL POLICY A healthy economy typically has low rates of unemployment and steady prices. Low rates of unemployment means that the economy is operating at its full potential. To ensure the economy continues to operate at potential GDP (full capacity where all savings are invested in production functions, and where all those who wish to work can find a job, and all other factors of production are fully utilized in the production function), governments use...
Discuss the goals of expansionary and contractionary monetary policies used by the Federal Reserve Bank and the approaches (called monetary policy tools) used to achieve each policy. Also, discuss the effect of each policy on GDP, price level, private investment (investment in capital acquisition by firms and housing by households), and net trade.
Explain that fiscal policy is less effective than monetary policy in a situation when investment is very interest elastic and money demand is very interest inelastic.
It's a weak economy. The Fed implements stimulative monetary policy to lower rates, expecting firms will increase borrowings. Banks are willing to lend. Why might the Fed's expectation that firms will borrow be wrong? What happens if they're wrong?
monetary policies are more flexible and easier to deploy than fiscal policy . monetary policy also has a more immediate impact and disrupt less the existing patterns of government expeniture and investment . Question in five double space pages long , to what extent do these policies affect the USA political economy and investment of the nation?
If Denmark wished to keep its exchange rate with the euro fixed, what monetary policy options are available to lower unemployment in the short run? Denmark has all the options available to it, because domestic monetary policy is conducted inside the nation and has no bearing on its international variables. Traders would realize that any monetary policy actions taken inside a nation would improve economic conditions without affecting international variables. Denmark cannot use any monetary policy that would cause its...
The more responsive investment spending is to changes in interest rates, the more effective monetary policy will be True or False - why?
1. (10 points) Milton Friedman has pointed out that when expansionary fiscal policy is used to increase real GDP, some private investment will be crowded out. Expansionary monetary policy will usually increase real GDP, by increasing autonomous consumption expenditures and private investment will expansionary monetary policy have the same beneficial effect on autonomous consumption and private investment for a large country in a global economy? Analyze both the fixed and flexible exchange rate cases and explain why the BP line...
and if C Monetary policy will be more effective if the money demand curve is and I are sensitive to changes in the interest rates O flatter; very Osteeper; very steeper; not flatter; not
. What are the “crowding-out effects” that limit the effectiveness of fiscal and monetary policy to stimulate the economy under the IS-LM mechanism? Specifically: a. How would the interest elasticities of the demand for investment and money affect the efficacy of fiscal vs. monetary policies? b. How would uncertainty about expected future taxes and regulations that increase labor costs to firms affect “autonomous” investments (the constant term in the investment demand function) and equilibrium output? c. How do financial regulations...