Identify and briefly explain TWO circumstances in which expansionary monetary policy could not be effectively used to restore full-employment.
In case the supply curve is vertical to the axis, then even with expansionary monetary policy, full employment cannot be restored.
Secondly, if the economy is in liquidity trap then also effective monetary policy won't work.
Identify and briefly explain TWO circumstances in which expansionary monetary policy could not be effectively used...
2. (12 marks) Use a AD/AS diagram to illustrate the use of expansionary monetary policy to close an expansionary gap. a. Label the axes. b. Label the lines. And show c. Show the new AD line after the expansionary monetary policy is applied. d. Briefly explain what your diagram shows. e. Explain what monetary policies impact. the expansionary gap with the LRAS. RAS SRAS
2. (12 marks) Use a AD/AS diagram to illustrate the use of expansionary monetary policy to close an expansionary gap. a. Label the axes. b. Label the lines. And show the expansionary gap with the LRAS c. Show the new AD line after the expansionary monetary policy is applied. d. Briefly explain what your diagram shows. e. Explain what monetary policies impact. LRAS SRAS Poh t AD2 recessiona
In your opinion, between the expansionary monetary policy and the contractionary monetary policy, which is more effective, and why?
Starting at macroeconomic equilibrium at full employment, show the effect of completely expected expansionary monetary policy using an aggregate demand–aggregate supply (AD–AS) model and discuss.
Think about the two types of monetary policy: expansionary and contractionary. Using what you have learned about open market operations, determine whether the noted actions below coincide with expansionary monetary policy or contractionary monetary policy. In a few sentences explain how. Action: Government securities are sold by the Fed. Expansionary Contractionary Action: The federal funds rate decreases. Expansionary Contractionary Action: The money supply increases. Expansionary contractionary
Explain why the expansionary monetary policy becomes ineffective during a liquidity trap? Suppose the government takes an expansionary fiscal policy by increasing its expenditure on military equipment. Here, would an expansionary fiscal policy be more effective than expansionary monetary policy to escape a liquidity trap?
Which kind of monetary policy would you expect in response to high inflation: expansionary or contractionary? Group of answer choices either could be deployed contractionary neither expansionary
Explain what is monetary policy, who is in charge of it, what tools are used to implement it. What kind of monetary policy has the Fed been conducting recently, and why? Explain briefly how this policy is aimed to affect inflation, employment and aggregate demand. For best results, you may want to look up recent FOMC announcements.
8. a) Explain what the Fed will do when implementing an expansionary monetary policy using open market operations. b) Be as specific as possible about the ways in which this policy will conditions in our economy.
Monetary Policy and Money Markets a. Graph the demand and supply of money at equilibrium. Identify the area of excess supply of money and excess demand for money. b.Graph the impact of contractionary monetary policy on Aggregate Demand through monetary policy transmission into the economy- use 3 graphs to illustrate the impact. Graph and list all contractionary monetary policy. c. Explain the transmission of expansionary monetary policy transmission and list all expansionary monetary policy tools d. Define the equation of...