Which of the following best describes the process (in order) of how monetary policy effects the macroeconomy? A. The 3 players have to cooperate, the aggregate demand changes, interest rate change, in...
Which of the following best describes the process (in order) of how monetary policy effects the macroeconomy?
A. The 3 players have to cooperate, the aggregate demand changes, interest rate change, investment and consumption change and then the money supply changes.
B. The 3 players have to cooperate, the money supply changes, interest rate change, investment and consumption change, and then the aggregate demand changes.
C. They 3 players have to cooperate, interest rate change, the money supply changes, investment and consumption change and then the aggregate demand changes.
D. The money supply changes, interest rate changes, investment and consumption change, the aggregate demand changes, and then the 3 players have to cooperate.
Homework Answers
With the use of monetary policy the repo rate changes thus there will change in lending interest rates of banks. This change in interest rates effects the change in money supply in the economy. This money supply further changes the investment and consumption thus changing the aggregate demand. This is the process in which monetary policy effect the macro economics.
Option C.
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Which of the following best describes the process (in order) of how monetary policy effects the macroeconomy? A. The 3 players have to cooperate, the aggregate demand changes, interest rate change, in...
The interest-rate-based approach to the monetary policy transmission mechanism says that a change in the money...
The interest-rate-based approach to the monetary policy transmission mechanism says that a change in the money supply influences aggregate demand by A: a change in interest rates, which changes investment. B: a change in interest rates, which changes the money supply. C: changing consumer consumption behavior as they adjust to a change in the number of dollars available. D: leading to shifts of the short-run aggregate supply curve.
What determines the magnitude of the changes in price level when central bank takes monetary policy...
What determines the magnitude of the changes in price level when central bank takes monetary policy measures that leads to a change in the aggregate demand? a. Changes in the money supply b. Slope of the aggregate supply curve c. Rate of change of interest rate d. Total money supply in the economy
Monetary policy refers to the Multiple Choice altering of the interest rate to change aggregate demand....
Monetary policy refers to the Multiple Choice altering of the interest rate to change aggregate demand. deliberate changes in government spending and taxes to stabilize domestic output, employment, and the price level. deliberate changes in government spending and taxes to achieve greater equality in the distribution of income. fact that equal increases in government spending and taxation will be contractionary
Which of the following is a monetary policy intended to rein in inflation? a. Reduce interest...
Which of the following is a monetary policy intended to rein in inflation? a. Reduce interest rates to increase investment spending b. Increase the money supply to shift the aggregate demand curve rightward c. Reduce the interest paid on banks' reserves d. Decrease the money supply to shift the aggregate demand curve leftward
If the Fed orders an expansionary monetary policy, describe what will happen to the following variables...
If the Fed orders an expansionary monetary policy, describe what will happen to the following variables relative to what would have happened without the policy: The money supply Interest rates Investment Consumption Net Exports The aggregate demand curve Real GDP The price level
1. List and explain the 3 tools of Federal Reserve Monetary Policy. 2. Explain how the...
1. List and explain the 3 tools of Federal Reserve Monetary Policy. 2. Explain how the Federal Reserve would use expansionary monetary policy to close a recessionary gap. Explain how the money supply, interest rate, investment spending, consumer spending, aggregate demand, real GDP, unemployment, and price level is affected. Illustrate this graphically below
Describe the channels by which monetary policy ripples through the economy and explain how each channel...
Describe the channels by which monetary policy ripples through the economy and explain how each channel operates. Suppose the Bank of Canada raises the overnight loans rate. When the Bank of Canada raises the overnight loans rate, it makes an open market Other short-term interest rates and the exchange rate rise. The quantity of money and the supply of loanable funds decrease The long-term real interest rate rises The higher real interest rate decreases consumption expenditure and investment. The exchange...
Which of the statements is true about monetary policy? a) Decrease in the money supply lowers...
Which of the statements is true about monetary policy? a) Decrease in the money supply lowers short-term interest rates and encourage investment and consumption demand. b) Monetary policy is determined by the Congress. c) Higher money supply does not have a permanent effect on economic activity because it results only in a higher price level in the long run. d) Monetary policy has the most immediate impact on the economy, but implementation of such a policy is usually slow.
2. Which of the following statements about aggregate demand is (are) correct? (x) The wealth effect...
2. Which of the following statements about aggregate demand is (are) correct? (x) The wealth effect helps explain the slope of the aggregate demand curve. This effect is relatively unimportant in the United States because money holdings are a small part of consumer wealth. (y) The interest-rate effect depends on the idea that increases in interest rates decrease the quantity of goods and services demanded. The interest-rate effect is the most important reason, in the case of the United States,...
49. The change in aggregate demand that results from fiscal expansion changing the interest rate is...
49. The change in aggregate demand that results from fiscal expansion changing the interest rate is called the a. multiplier effect. b. crowding-out effect. c. accelerator effect. d. Ricardian equivalence effect. 50. If the stock market booms, then a. aggregate demand increases, which the Fed could offset by increasing the money b. aggregate supply increases, which the Fed could offset by increasing the money c. aggregate demand increases, which the Fed could offset by decreasing the money d. aggregate supply...
Monetary policy refers to the Multiple Choice altering of the interest rate to change aggregate demand. deliberate changes in government spending and taxes to stabilize domestic output, employment, and the price level. deliberate changes in government spending and taxes to achieve greater equality in the distribution of income. fact that equal increases in government spending and taxation will be contractionary
1. List and explain the 3 tools of Federal Reserve Monetary Policy. 2. Explain how the Federal Reserve would use expansionary monetary policy to close a recessionary gap. Explain how the money supply, interest rate, investment spending, consumer spending, aggregate demand, real GDP, unemployment, and price level is affected. Illustrate this graphically below
Describe the channels by which monetary policy ripples through the economy and explain how each channel operates. Suppose the Bank of Canada raises the overnight loans rate. When the Bank of Canada raises the overnight loans rate, it makes an open market Other short-term interest rates and the exchange rate rise. The quantity of money and the supply of loanable funds decrease The long-term real interest rate rises The higher real interest rate decreases consumption expenditure and investment. The exchange...
2. Which of the following statements about aggregate demand is (are) correct? (x) The wealth effect helps explain the slope of the aggregate demand curve. This effect is relatively unimportant in the United States because money holdings are a small part of consumer wealth. (y) The interest-rate effect depends on the idea that increases in interest rates decrease the quantity of goods and services demanded. The interest-rate effect is the most important reason, in the case of the United States,...
49. The change in aggregate demand that results from fiscal expansion changing the interest rate is called the a. multiplier effect. b. crowding-out effect. c. accelerator effect. d. Ricardian equivalence effect. 50. If the stock market booms, then a. aggregate demand increases, which the Fed could offset by increasing the money b. aggregate supply increases, which the Fed could offset by increasing the money c. aggregate demand increases, which the Fed could offset by decreasing the money d. aggregate supply...
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