a) Which of the follwing monetary policy actions can be used to close an inflationary gap? O No change in the money supply to keep interest rates constant. ODecrease the money supply to decrease interest rates, OIncrease the money supply to increase interest rates. O Increase the money supply to decrease interest rates. O Decrease the money supply to increase interest rates. b) Assume the economy is initially at full-employment equilibrium. Suppose the economy slows down and uncertainty increases, reducing consumption and investment expenditures, in the short run, this shock willcause the economy to fall below full enployment. To move the economy to a full-employment equilibrium, the Fed could: O. decrease government spending O. increase corporate tax rates O. lower the federal fund rate target O. increase government spending O. raise interest rates
a) Which of the follwing
O No change in the money supply to keep interest rates constant.
ODecrease the money supply to decrease interest rates,
OIncrease the money supply to increase interest rates.
O Increase the money supply to decrease interest rates.
O Decrease the money supply to increase interest rates.
b)
Assume the economy is initially at full-employment equilibrium. Suppose the economy slows down and uncertainty increases, reducing consumption and investment expenditures, in the short run, this shock willcause the economy to fall below full enployment. To move the economy to a full-employment equilibrium, the Fed could:
O. decrease government spending
O. increase corporate tax rates
O. lower the federal fund rate target
O. increase government spending
O. raise interest rates
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