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D7) Federal Reserve and their impacts on our economy. Role of Federal Reserve in Economy

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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18. "Liquidity trap" was a problem of a) monetary policy of Japan and Sweden. b) fiscal policy in Japan. c) fiscal and monetary policy of Japan. d) fiscal and monetary policy of both Japan and Sweden. e) monetary policy of Japan, fiscal policy of Sweden.
6. Monetary policy in the long run Consider a hypothetical economy that produces at its long-run macroeconomic equilibrium at a price level of 100. Suppose that the central bank in this economy is expanding the money supply by 4% each year. In order for the price level to be maintained at 100, real GDP must grow at an annual rate of (percentage?) if the velocity of money remains constant. Suppose the central bank enacts an unanticipated restrictive monetary policy. As a result, the supply of loanable funds (decreases/ Increase) , leading to a (rise/fall) in short-term interest rates. This in turn (reduces/raises) the opportunity cost of holding money. As people hold (Lower/ higher) money balances, the (velocity of money/ Price level/ aggregate output) will (rise/fall). True or false?: The shift in monetary policy exerts an impact on output and the general level of prices with a time lag. 6. Monetary policy in the long run Consider a hypothetical economy that produces at its…
Banks have to ensure that they are able to meeting all clients’ withdrawals by “holding liquidity”.c) Please explain the regulation of liquidity by Basel rules.(Basel-II liquidity regulation, event for strict(er) rules, enhancement by Basel-III-rules, measurement of liquidity situation of banks, effects on banks’ profit situation).
19 The following is TRUE about monetary policy EXCEPT, It relates to revenue and expenditure by government budget. It manages the creation and flow of money and credit in the economy. It aims to control the money supply and regulate the monetary sector. It uses interest rate and money supply as monetary tools.
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46) In 2008, Japan's economy suffered as world economies slowed. If authorities in Japan followed the monetarist viewpoint, to bring the economy back to full employment.A) taxes would be decreased and the money supply should be increasedB) nothing should be doneC) aggregate supply would shift leftwardD) the money supply would be kept growing at a steady pace
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32 - What happens as a result of aggregate demand and aggregate supply if the money supply decreases?A) Prices fall – output increasesB) NoneC) Prices increase – output decreasesD) Prices fall – production decreasesE) Prices increase – production increases
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23) Which of the following legislation says the Federal Reserve should promote price stability and maximum employment, but does not specify how the Federal Reserve should weight these goals? the Clayton Antitrust Act of 1914 There is no such legislation affecting the Federal Reserve. the Federal Reserve Act of 1913 a 1977 amendment to the Federal Reserve Act.