An increase in the level of nominal aggregate output (Y) and the purchase of government securities by the central bank Select one: a. money supply unchanged, money demand decrease and interest rate decrease O b. money supply increase, money demand increase, interest rate uncertain O c. money supply increase, money demand unchanged, interest rate decrease d. money supply decrease, money demand unchanged, interest rate increase money supply decrease, money demand decrease, interest rate increase ge Next page

An increase in the level of nominal aggregate output (Y) and the purchase of government securities by the central bank Select one: a. money supply unchanged, money demand decrease and interest rate decrease O b. money supply increase, money demand increase, interest rate uncertain O c. money supply increase, money demand unchanged, interest rate decrease d. money supply decrease, money demand unchanged, interest rate increase money supply decrease, money demand decrease, interest rate increase ge Next page

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Please Don't answer by pen paper i will rate
Assume that there is an increase in perceived bankruptcy risk. As a result of this we would expect to see a. money demand and interest rates to rise. b. income and interest rates to rise. c. money demand and interest rates to fall. d. money supply to rise and interest rates to fall.
ents Correct Answer You Answered Suppose the Fed conducts monetary policy by targeting nominal expenditure growth to 8%. If Y = 3, and = 3. What policy should the Fed take? Contractionary policy, increasing the money supply by selling bonds, so interest rates decrease The Fed should do Nothing Expansionary policy, increasing the money supply by buying bonds. so interest rates decrease Contractionary policy, decreasing the money supply by selling bonds, so interest rates increase 4 None of the above are correct Q Search Contractionary policy, decreasing the money supply by selling be 13
Problem 2 10. The primary purpose of the legal reserve requirement is to: O prevent banks from hoarding too much vault cash. prevent commercial banks from earning excess profits. provide a dependable source of interest income for commercial banks. provide a means by which the monetary authorities can influence the lending ability of commercial banks. 11. An increase in the money supply is most likely to have which of the following short-run effects on real interest rates and real coutput? * Real Interest Rates Real Output
12 Assume that the Saudi economy is in a recession and SAMA decides to implement an expansionary monetary policy. Use appropriately labeled graphs to trace the impact of an expansionary monetary policy on the: the money market, market for loanable funds aggregate goods market
If the Quantity Theory of Money is correct, then if velocity is constant and money supply increases it must be the case that the level of real GDP increases. inflation is constant. nominal interest rates must rise by more than inflation. O the level of nominal GDP increases.
Solve all subparts
A4 Assume the economy is already at full employment. If the central bank increases the money supply, how does it affect the money market and the price level in the long run?
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Please answer correct explain a b c Don't answer by pen paper
As the figure to the right indicates, the Fed can affect both the money supply and interest rates. However, in recent years, the Fed targets interest rates in monetary policy more often than it does the money supply. Which interest rate does the Fed target? OA. The federal funds rate OB. The long-term nominal interest rate OC. The short-term real interest rate OD. The discount rate 6- 0- 700 MS₂ MS₁ B MD 750 800 850 900 950 1,000 1,050 1,100 Quantity of Money, M (Sbillions)
QUESTION 12 The fed funds rate and the discount rate are interest rates banks charge households to borrow money overnight. O True O False QUESTION 13 What happened to the discount rate in January 2003 and why? Read this article from the Federal Reserve to find the answer. The discount rate moved below the fed funds rate because fewer banks wanted to borrow from the Fed anymore The discouunt rate became equal to the fed funds rate because the bank lending programs were merged into one The discount rate moved above the fed funds rate so any sound financial institution could borrow from the Fed and to eliminate the perception banks were being subsidized O All of the above None of the above QUESTION 14 What is the most important change in the fed funds rate since the Financial Crisis began in 2007? O it is much lower and has been essentially zero percent (0%) most of the time O It has become much more variable (ups and downs) O It no longer increases shortly before a recession (gray shaded…