1. Explain in detail how an open market purchase (or sale) works. Explain what happens to interest rates, loans, spending, aggregate demand and money supply. Draw an AD/SRAS graph.
1. Explain in detail how an open market purchase (or sale) works. Explain what happens to...
1. Labour Market. Draw a diagram of the labour market where there above the equilibrium level. Use I to denote the amount of labour to denote the amount of labour hired. bour market where the real wage is stuck note the amount of labour willing to work and L1 Now suppose there is an increase in technology that raises the demand the new demand curve and explain what happens to the and curve and explain what happens to the number...
Question 1 (1 point) An open market purchase of T-bills by the Fed will: have no effect on the money supply. decrease the money supply. increase the money supply. O increase the amount of government bonds held at banks. Question 2 (1 point) Contractionary monetary policy _____ interest rates, causing aggregate demand to shift to the lowers; right Olowers; left O raises; right Oraises; left Which of the following aggregate demand - aggregate supply models illustrates the short-run effects of...
1. Explain what will happen to the price level real GDP and the unemployment rate in the following cases: a. AD falls by the same amount that SRAS rises b. AD falls by less than SRAS rises c. AD falls by more than SRAS falls d. AD falls by the same amount that SRAS falls e. AD falls by less than SRAS falls 2. Explain how expectations about future sales will affect investment. 3. How will a change in the...
Explain how open market sales lead to a decrease in aggregate demand. Your explanation should touch on the money supply, interest rates, and specific actions by households and firms that are impacted.
Write the answers to and explain the following: What action can the Federal Reserve take to reduce unemployment? What is the primary tool used by the Federal Reserve to accomplish the action you listed in part (a)? Explain in detail how this tool works. Assuming the economy is currently operating at the natural rate of unemployment, what effect will the action you listed in part (a) have in the short-run on: output price level interest rates Use the AS/AD (Aggregate...
In the economy depicted in the graph, what happens if there is no intervention from policy makers? Use the graph, where LRAS represents long-run aggregate supply, SRAS represents short-run aggregate supply, and AD represents aggregate demand, to demonstrate the answers by shifting the appropriate curve or curves. LRAS SRAS Prices will Aggregate price level (P) decrease. O increase. Output will decrease. Real output (Q) O increase.
Fed uses open market operations to influence the money supply. Explain both an open market purchase and an open market sale.
5. (10 Marks) The money market for the economy of Charlton is depicted in the graph given below (all dollar figures are in billions): Interest rate 50 100 150 200 250 300 Quantity of money The investment demand curve is shown in the following figure. 250 50 100 150 200 Quantity of investment Suppose that the central bank of Charlton wishes to use contractionary monetary policy and decreases the money supply by $50 billion. a. Draw the new money supply...
Using the aggregate demand (AD), the short-run aggregate supply (SRAS), and the long-run aggregate supply (LRAS) curves, briefly explain how an open market purchase will affect the equilibrium price level (P) and real output (Y) in the short run. Assume the economy is initially in a recession?
If the market power of firms increases, what happens in the AD/AS model? Aggregate demand shifts to the right. Aggregate supply shifts to the right. Aggregate supply shifts to the left. Aggregate demand shifts to the left.