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.
Explain that fiscal policy is less effective than monetary policy in a situation when investment is...
Monetary policy is ____________ efficient than fiscal policy because _____________. less; fiscal policy is conducted by elected officials more; of central bank independence more; of political institutions less; of the long run neutrality of money
Why may an expansionary monetary policy be less effective than a restrictive monetary policy? the Federal Reserve Banks are always willing to make loans to commercial banks which are short of reserves. commercial banks may not be able to find loan customers. fiscal policy always works at cross purposes with an expansionary monetary policy. changes in exchange rates complicate an expansionary monetary policy more than it does a restrictive monetary policy.
7. fiscal policy tool Show graphically that tax cuts are a more effective demand to interest rates. the greater is the sensitivity of money Show graphically that monetary policy is a less powerful tool the greater is the sensitivity of money demand to interest rates. 8. 7. fiscal policy tool Show graphically that tax cuts are a more effective demand to interest rates. the greater is the sensitivity of money Show graphically that monetary policy is a less powerful tool...
Suppose we had a case in which the interest elasticity of both money demand and investment demand were quite low. Would either monetary or fiscal policy be very effective? How would you interpret such a situation? 4. Suppose we had a case in which the interest elasticity of both money demand and investment demand were quite low. Would either monetary or fiscal policy be very effective? How would you interpret such a situation? 4.
(a)Which is more effective between fiscal policy and monetary policy in tacking inflation and tackling economic recession? (b) Discuss fully the relationship between the quantity theory of money and money demand
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
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?
6. MONETARY AND FISCAL POLICY WITH AN INTEREST RATE TARGET a. What is the slope of the LM curve when there is an interest rate target? b. What is the intercept of the LM curve when there is an interest rate target? c. If the level of investment responds strongly to the rate of interest, and the central bank is following an interest rate target, draw the consequences for output when the interest rate target is increased. When is fiscal...
On which of the following policies do Keynesians and monetarists agree? Fiscal policy is most effective in a very open economy. Monetary policy is less effective in a very open economy. Fiscal policy works directly through spending. Monetary policy works indirectly through spending.
. 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...