Determine whether each policy below is expansionary (increasing aggregate demand) orcontractionary (decreasing aggregate demand) and whether it is fiscal or monetary policy.1. The Federal Reserve buys bonds ✓ [Select]Contractionary Fiscal PolicyExpansionary Fiscal PolicyExpansionary Monetary PolicyContractionary Monetary Policy3. The Federal Reserve raises the required reserve ratio. [Select]2. Congress increases Medicare sp4. Congress cuts defense spending. [Select]

Monetary and fiscal policy are used to bring the economy to full employment.

Determine whether each policy below is expansionary (increasing aggregate demand) or contractionary (decreasing aggregate demand) and whether it is fiscal or monetary policy. 1. The Federal Reserve buys bonds ✓ [Select] 2. Congress increases Medicare spe Contractionary Fiscal Policy Expansionary Fiscal Policy Expansionary Monetary Policy Contractionary Monetary Policy [Select] 3. The Federal Reserve raises the required reserve ratio. 4. Congress cuts defense spending. [Select]

Determine whether each policy below is expansionary (increasing aggregate demand) or contractionary (decreasing aggregate demand) and whether it is fiscal or monetary policy. 1. The Federal Reserve buys bonds ✓ [Select] 2. Congress increases Medicare spe Contractionary Fiscal Policy Expansionary Fiscal Policy Expansionary Monetary Policy Contractionary Monetary Policy [Select] 3. The Federal Reserve raises the required reserve ratio. 4. Congress cuts defense spending. [Select]

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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26. A contractionary monetary policy combined with an expansionary fiscal policy will (A) decrease both income and consumption (B) increase both income and consumption (C) have uncertain effects on the interest rate and investment D) increase the interest rate and decrease investment (E) increase both the interest rate and investment
Start with a brief introduction that explains use of Government policy to control the economy. When is it appropriate to use monetary and fiscal policy to stimulate or stabilize the economy? Look at both. When is it inappropriate to use monetary and fiscal policy to stimulate or stabilize the economy? Look at both. What specific fiscal policy tools would you use to stimulate aggregate demand and how? What specific monetary policy tools would you use to stimulate aggregate demand and how? What is your conclusion, should policymakers use the monetary and or fiscal policy, or a combination of both, to stimulate aggregate demand? Explain your reasoning.
Monetary policy actions by the Fed are Multiple Choice a. more effective in a restrictive direction than they are in an expansionary direction. b. more effective in an expansionary direction than they are in a restrictive direction. c. equally effective in both expansionary and restrictive directions. d. only effective when coupled with fiscal policy actions.
When real GDP is greater than potential output, it is most likely that the Fed will engage in open-market: Sales of Treasury securities. Purchasing US public debt. O Purchases of Treasury securities. O Lend the government more money.
In the most recent FOMC meeting, the Federal Reserve increased the Federal Funds rate. By doing this, this suggests the Federal Reserve: a is willing to sacrifice jobs to keep prices stable b is willing to sacrifice higher prices to save jobs c believes the Federal Funds rate is not important d is trying to counter fiscal policy actions
6. Use of discretionary policy to stabilize the economy Should the government use monetary and fiscal policy in an effort to stabilize the economy? The following questions address the issue of how monetary and fiscal policies affect the economy, as well as the pros and cons of using these tools to combat economic fluctuations. The following graph plots hypothetical aggregate demand (AD), short-run aggregate supply (AS), and long-run aggregate supply (LRAS) curves for the U.S. economy in January 2026. Suppose the government chooses to intervene in order to return the economy to the natural level of output by using ▾ policy. Depending on which curve is affected by the government policy, shift either the AS curve or the AD curve to reflect the change that would successfully restore the natural level of output.
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How would I do d?
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