The financial crisis of 2008 and the eventual recession that occurred caused the Fed to take...
The financial crisis of 2008 and the eventual recession that occurred caused the Fed to take drastic monetary policy action. Which of the following best describes what they did?
A. The Fed's action shifted the MP curve down to the right, which lead to the aggregate demand curve shifting to the right
B. The Fed's action shifted the MP curve to the left, which lead to the aggregate demand shifting to the right
C. The Fed's action caused movement along the MP curve down to the right, which lead to the aggregate demand curve shifting to the right
D. The Fed's action shifted the MP curve down to the right, which lead to the aggregate demand curve shifting to the left
Homework Answers
The correct answer is option A. The Fed's action shifted the MP curve down to the right, which lead to the aggregate demand curve shifting to the right. The traditional strategy adopted by the Fed was to reduce federal funds rate and that lead to a decline in real interest rate.
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The financial crisis of 2008 and the eventual recession that
occurred caused the Fed to take...
Question 17 (1 point) With the onset of the 2007-2008 Great Recession, the Fed, led by...
Question 17 (1 point) With the onset of the 2007-2008 Great Recession, the Fed, led by Fed Chairman Ben Bernanke (2006- 2014), lowered its target interest rate (the federal funds rate) to a range of 0.00-0.25 percent. This was done with 7 rate cuts during 2008, after several in 2007. Consider the market for money illustrated in the figure below. Assume the market initially (just prior to Great Recession) is in equilibrium at point A. Describe the effects the Fed's...
Since about November of 2018, we have seen a change in the Fed's policy strategy. In...
Since about November of 2018, we have seen a change in the Fed's policy strategy. In accordance with the material in chapter 21, which of the following would be a correct statement? A. The MP curve has shifted down to the right B. There has been a rightward movement along the MP curve C. There has been a leftward movement along the MP curve D. The MP curve has shifted up to the left
With the onset of the 2007-2008 Great Recession, the Fed, led by Fed Chairman Ben Bernanke...
With the onset of the 2007-2008 Great Recession, the Fed, led by Fed Chairman Ben Bernanke (2006- 2014), lowered its target interest rate (the federal funds rate) to a range of 0.00-0.25 percent. This was done with 7 rate cuts during 2008, after several in 2007. Consider the aggregate demand aggregate supply diagram below, which represents the macroeconomy. Suppose the market is initially at an equilibrium at point A. What effect will the Fed's actions have on this economy? LRAS:...
the economy is experiencing a recession and high unemployment a. Use an AD-AS model together with the Fed Funds market to represent ther short ran equilibrium in b. What types of monetary policy...
the economy is experiencing a recession and high unemployment a. Use an AD-AS model together with the Fed Funds market to represent ther short ran equilibrium in b. What types of monetary policy (i.e.. expansionary or restrictive) should the Fed implement? c. In implementing the policy you suggest. which actions (please give at least two actions) should the Fed take to achieve this policy? Explain how t he y policy would address this problem and the consequence of the monetar...
15. (4 points) The Taylor Principle states that central banks raise nominal rates by than any...
15. (4 points) The Taylor Principle states that central banks raise nominal rates by than any rise in expected inflation so that real interest rates when there is a rise in inflation. A) less; rise B) more; fall 9 less; fall D) more; rise 16. (4 points) When the financial crisis started in August 2007, inflation was rising and the Fed began an aggressive easing lowering of the federal funds rate, which indicated that A) there was an upward movement...
On March 15, 2017, Federal Reserve Chairman Janet L. Yellen announced the Federal Reserve was raising...
On March 15, 2017, Federal Reserve Chairman Janet L. Yellen announced the Federal Reserve was raising its benchmark rate (the federal funds rate) by a quarter of a percentage point (to a range of 0.75-1.00 percent). This was the third time the Fed has raised rates after the Great Recession. Consider the market for money illustrated in the figure below. Assume the market initially just prior to March 15, 2017) is in equilibrium at point A. Describe the effects of...
5) The Great Recession beginning in 2007 was caused by a) The Federal Government reducing spending....
5) The Great Recession beginning in 2007 was caused by a) The Federal Government reducing spending. b) The rapid increase and subsequent decline in housing prices. c) Foreign countries reducing their demand for American Goods. d) Baby Boomers retiring from the economy. 6) Suppose that the economy is experiencing a recessionary gap. If you believe in "small government", then the most appropriate policy would be to a) Raise income taxes. b) Lower income taxes. c) Raise government spending. d) Lower...
Starting from the top drop down questions: 1. Fall / rise 2. 18% / 12% /...
Starting from the top drop down
questions:
1. Fall / rise
2. 18% / 12% / 3% / 9% / 6% / 15 %
3. increase / decrease
4. up / down
5. more / less
6. an increase / no change / a decrease
7. an increase / no change / a decrease
8. an increase / no change / a decrease
3. The Keynesian transmission mechanism Suppose the Federal Reserve shifts to an expansionary monetary policy by buying...
20. Banks decide to raise the interest rate they pay on checking accoun action would A)...
20. Banks decide to raise the interest rate they pay on checking accoun action would A) increase money demand, shifting the LM curve up and to the ci B) increase money demand, shiftino the IM curve down and to the C) decrease money demand, shifting the M curve up and to the tem D) decrease money demand, shifting the LM curve down and to cing accounts from 1% to 2%. This curve down and to the right. & the LM...
Question 17 (1 point) With the onset of the 2007-2008 Great Recession, the Fed, led by Fed Chairman Ben Bernanke (2006- 2014), lowered its target interest rate (the federal funds rate) to a range of 0.00-0.25 percent. This was done with 7 rate cuts during 2008, after several in 2007. Consider the market for money illustrated in the figure below. Assume the market initially (just prior to Great Recession) is in equilibrium at point A. Describe the effects the Fed's...
With the onset of the 2007-2008 Great Recession, the Fed, led by Fed Chairman Ben Bernanke (2006- 2014), lowered its target interest rate (the federal funds rate) to a range of 0.00-0.25 percent. This was done with 7 rate cuts during 2008, after several in 2007. Consider the aggregate demand aggregate supply diagram below, which represents the macroeconomy. Suppose the market is initially at an equilibrium at point A. What effect will the Fed's actions have on this economy? LRAS:...
the economy is experiencing a recession and high unemployment a. Use an AD-AS model together with the Fed Funds market to represent ther short ran equilibrium in b. What types of monetary policy (i.e.. expansionary or restrictive) should the Fed implement? c. In implementing the policy you suggest. which actions (please give at least two actions) should the Fed take to achieve this policy? Explain how t he y policy would address this problem and the consequence of the monetar...
15. (4 points) The Taylor Principle states that central banks raise nominal rates by than any rise in expected inflation so that real interest rates when there is a rise in inflation. A) less; rise B) more; fall 9 less; fall D) more; rise 16. (4 points) When the financial crisis started in August 2007, inflation was rising and the Fed began an aggressive easing lowering of the federal funds rate, which indicated that A) there was an upward movement...
On March 15, 2017, Federal Reserve Chairman Janet L. Yellen announced the Federal Reserve was raising its benchmark rate (the federal funds rate) by a quarter of a percentage point (to a range of 0.75-1.00 percent). This was the third time the Fed has raised rates after the Great Recession. Consider the market for money illustrated in the figure below. Assume the market initially just prior to March 15, 2017) is in equilibrium at point A. Describe the effects of...
5) The Great Recession beginning in 2007 was caused by a) The Federal Government reducing spending. b) The rapid increase and subsequent decline in housing prices. c) Foreign countries reducing their demand for American Goods. d) Baby Boomers retiring from the economy. 6) Suppose that the economy is experiencing a recessionary gap. If you believe in "small government", then the most appropriate policy would be to a) Raise income taxes. b) Lower income taxes. c) Raise government spending. d) Lower...
Starting from the top drop down
questions:
1. Fall / rise
2. 18% / 12% / 3% / 9% / 6% / 15 %
3. increase / decrease
4. up / down
5. more / less
6. an increase / no change / a decrease
7. an increase / no change / a decrease
8. an increase / no change / a decrease
3. The Keynesian transmission mechanism Suppose the Federal Reserve shifts to an expansionary monetary policy by buying...
20. Banks decide to raise the interest rate they pay on checking accoun action would A) increase money demand, shifting the LM curve up and to the ci B) increase money demand, shiftino the IM curve down and to the C) decrease money demand, shifting the M curve up and to the tem D) decrease money demand, shifting the LM curve down and to cing accounts from 1% to 2%. This curve down and to the right. & the LM...
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