Question

- The fed cannot predict the effects of open- market operations with perfect accuracy because of? bone A foreigner desire to hold u.s. dollars. b. all of the above are correct cbank's desire to hold excess reserves. d changes in people's desires for cash 2 Which of the following is most sensitive to monetary policy d Government expenditure b utility spending Investment spending e consumption spending Which of the following is an unconventional monetary policy? A All of these are unconventional monetary policies. blending to bank in unprecedented volume c Lending to companies other than banks d Reducing the federal funds rate to zero. - d Reduing to count in unentionale

Answer 1

1. Option b. all the above are correct.The Fed purchase and sale of government securities is known as open operations.The Fed cannot predict the effects of open market operations with perfect accuracy because of the factors such as  changes in people's desires for cash, foreigners desire to hold U.S. dollars, banks' desires to hold excess reserves. So,all of the options are correct

2. Option c Investment Spending.  Any change in the money supply have a greater impact on the investment in the economy. Monetary policy also effects the consumer spending, government expenditure, utility spending but the investment spending is most sensitive to monetary policy.

3. Option A. all of these are unconventional monetary policies Unconventional monetary policy which effects the financing to increase the demand, investment in the economy. Tools of unconventional monetary policy are lending to bank in unprecedented volume, lending to companies other than banks and reducing the federal funds rate to zero. So, all these are unconventional monetary policies.