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6) Fiscal crowd-out can be avoided by decreasing M when expansionary fiscal shocks are implemented.

6) Fiscal crowd-out can be avoided by decreasing M when expansionary fiscal shocks are implemented.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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III. True/False – Explain: 1) According to Walras Law excess demand in the money market would also be associated with an excess demand for bonds. 2) When the Fed lowers the discount rate the money supply might or might not increase. 3) The money multiplier has changed dramatically in the last few years because of significant changes in s. 4) The federal funds rate is an interest rate that the Fed directly controls. 5) An expansionary monetary shock leads to a net decrease in investment because of monetary feedback. 6) Fiscal crowd-out can be avoided by decreasing M when expansionary fiscal shocks are implemented. 7) Banks with excess reserves can potentially create DDs in excess of their level of excess reserves. 8) The money supply in the United States has increased dramatically in the last few years because the money multiplier has significantly increased. 9) Fiscal policy is more effective when money demand is very responsive to interest rate changes.
Transcribed Image Text:III. True/False – Explain: 1) According to Walras Law excess demand in the money market would also be associated with an excess demand for bonds. 2) When the Fed lowers the discount rate the money supply might or might not increase. 3) The money multiplier has changed dramatically in the last few years because of significant changes in s. 4) The federal funds rate is an interest rate that the Fed directly controls. 5) An expansionary monetary shock leads to a net decrease in investment because of monetary feedback. 6) Fiscal crowd-out can be avoided by decreasing M when expansionary fiscal shocks are implemented. 7) Banks with excess reserves can potentially create DDs in excess of their level of excess reserves. 8) The money supply in the United States has increased dramatically in the last few years because the money multiplier has significantly increased. 9) Fiscal policy is more effective when money demand is very responsive to interest rate changes.
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