Answer
Option 2
district Federal Reserve bank inconsistency
An expansionary fiscal or monetary policy or both are used to
tackle recession which can make high inflation, can worse recession
and increase unemployment but can not effect on the district FED
workings.
An expansionary policy increases the money supply in the economy and increases inflation.
the problem might go into opposite way as the expansionary policy leads to Stagflation
All of the following are risks of conducting fiscal or monetary policy to counter recessions EXCEPT...
WEEK 6: MONETARY POLICY AND FISCAL POLICY A healthy economy typically has low rates of unemployment and steady prices. Low rates of unemployment means that the economy is operating at its full potential. To ensure the economy continues to operate at potential GDP (full capacity where all savings are invested in production functions, and where all those who wish to work can find a job, and all other factors of production are fully utilized in the production function), governments use...
Which of the following is an objective of the Federal Reserve in conducting its monetary policy? O Price stability O To counter LIBOR Tto maintain a steady Fed funds rate
“Choosing a point” on the Phillips Curve, and conducting monetary and fiscal policy so that the economy gets to that combination of unemployment and inflation is not always a viable strategy. Why?
Among the most important problems of implementing fiscal policy include all except which of the following? Correctly timing the desired fiscal stimulus, given the inevitable lags and forecasting errors Determining how large a stimulus to apply Assessing when policy actions should be reversed Determining how long a time lag to apply If the central bank does not use accommodating monetary policy, a fiscal stimulus is likely to increase interest rates, which in turn, will cause planned investment to decrease. What...
2. Rules versus discretion This question addresses the issue of whether monetary policy should be made by discretionary policy or be implemented according to a set of rules. Which of the following statements reflect arguments in favor of policy by rule rather than discretion? Check all that apply. Monetary rules reduce the flexibility of the Federal Reserve. It is impossible for a policy rule to consider all the possible scenarios and specify, in advance, the right policy response. It is...
A central back engages in tight monetary policy in order to prevent inflation from undermining economic growth. Shift the aggregate demand (AD) curve on the graph below to show the impact of this policy on the economy. Provide your answer below: Price Level Aggregate Supply Aggregate Demand Real GDP QUESTION 25 - 1 POINT A healthy economic climate usually involves some sort of market orientation at the making level. individual, or firm decision- Select the correct answer below: O macroeconomic...
When would the Federal Reserve engage in contractionary monetary policy? a. never b. when inflation is high c. when unemployment is high d. when gdp is low
Which organization is directly responsible for conducting Monetary Policy in the United States? The Federal Reserve Bank of New York. The United States Treasury The Federal Open Market Committee. U.S. Congress
Carefully explain how monetary policy can be used to counter a recession. Explain what the central bank does as well as how its actions affect the economy. Under what circumstances is fiscal policy especially useful?
7. Those who advocate counter-cyclical fiscal policy would agree with all but one of the following statements. Which is the exception? A) Governments should be non-interventionist. B) Automatic stabilizers are not particularly effective. C) The economy is not capable of automatic self-adjustment in response the problems of unemployment and inflation. D) Counter cyclical fiscal policy is a powerful and effective tool. E) Government budget deficits are a less serious problem than income gaps. 8. Assume that the economy is in...