A. Asset price declines; banking crises; unanticipated decline in the price level. B. Unanticipated decline in price level; banking crises; increase in interest rates. C. Banking crises; increase in interest rates; unanticipated decline in price level. D. Banking crises; increase in uncertainty; increase in interest rates. E None of the above

A. Asset price declines; banking crises; unanticipated decline in the price level. B. Unanticipated decline in price level; banking crises; increase in interest rates. C. Banking crises; increase in interest rates; unanticipated decline in price level. D. Banking crises; increase in uncertainty; increase in interest rates. E None of the above

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5.
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Question 2 Full explain this question
4. Policy issues .. Suppose an economy exhibits a large unexpected decrease in productivity growth that lasts for a decade; however, monetary policymakers are slow to recognize that the change is to potential not current-output and they interpret the decrease in output as a recession that leads current output to fall below potential output. In this scenario, what likely are the responses from policy makers? What is possible consequence?
11. Which policy tool involves the federal reserve setting a short-term interest rate to lend directly to financial institutions? a. The fed funds rate b. The discount rate c. The interest rate paid on excess reserves d. The rate of required reserves 12. Suppose the federal reserve announces a policy of purchasing short-term bonds from the financial system. This policy is an example of a. Expansionary monetary policy through open market operations designed to decrease the federal funds rate b. Contractionary monetary policy through open market operations designed to increase the federal funds rate