A.) The BSP sells securities in the open market. Answer: B.) The BSP buys foreign exchange currencies (e.g., dollars). Answer:

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Need answers for A and B

For each of the monetary tool imposed by BSP:
1. Determine whether it is an expansionary or a contractionary policy.
2. Determine the effect of the monetary tool on the money market, equilibrium
interest rate and equilibrium quantity of money, and on the economy (i.e., effect
only on production and spending).
Example answer:
expansionary policy; A; increase; decrease; decrease production and spending
A
B
MS2
MS,
MS1
MS2
iz
MD
`MD
QM
Q2
QM
Q2
A.) The BSP sells securities in the open market.
Answer:
B.) The BSP buys foreign exchange currencies (e.g., dollars).
Answer:
Transcribed Image Text:For each of the monetary tool imposed by BSP: 1. Determine whether it is an expansionary or a contractionary policy. 2. Determine the effect of the monetary tool on the money market, equilibrium interest rate and equilibrium quantity of money, and on the economy (i.e., effect only on production and spending). Example answer: expansionary policy; A; increase; decrease; decrease production and spending A B MS2 MS, MS1 MS2 iz MD `MD QM Q2 QM Q2 A.) The BSP sells securities in the open market. Answer: B.) The BSP buys foreign exchange currencies (e.g., dollars). Answer:
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