If investment and consumption expenditures fall and cause GDP to fall, what is an appropriate monetary policy? Question 36 options: increase monetary base growth and decrease interest rates increase taxes and decrease government expenditures decrease monetary base growth and increase interest rates decrease taxes and increase government expenditures

If investment and consumption expenditures fall and cause GDP to fall, what is an appropriate monetary policy? Question 36 options: increase monetary base growth and decrease interest rates increase taxes and decrease government expenditures decrease monetary base growth and increase interest rates decrease taxes and increase government expenditures

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter14: Money And The Economy

Section: Chapter Questions

Problem 2QP

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If investment and consumption expenditures fall and cause GDP to fall, what is an appropriate monetary policy? decrease monetary base growth and increase interest rates decrease taxes and increase government expenditures increase monetary base growth and decrease interest rates increase taxes and decrease government expenditures
Assume the economy has entered a recession. Identify two fiscal and two monetary policy actions that could be used to alleviate the recession and explain how each policy would improve the economy.
The mandate of the South African Reserve Bank (SARB) states that “the Reserve Bank is required to achieve and maintain price stability in the interest of balanced and sustainable economic growth in South Africa”. There are several macroeconomic determinants that in many ways affect the outlook of the economy, such as inflation, growth, interest rates, unemployment and exchange rates. There has been an ongoing conversation among economists and politicians about the mandate of the SARB. Do you think that the mandate of the SARB should change? Support your view.
In what situation is the use of Monetary Policy not effective? In all situations monetary policy is effective. When the economy experienced excessive economic growth When the economy experiences a very severe recession When the economy experiences stagflation
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Monetary policy as one of the macroeconomic policies is generally implemented in line with the cycle of economic activity (business cycle). Based on this, answer the following questions: a) Explain what monetary policy is appropriate to apply when there is a decline in GDP, economic growth slows and there is a decline in the prices of goods? b) Explain what monetary policy is appropriate to apply when there is an increase in the amount of real output or economic growth and an increase in the price of goods? Explain!
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A monetary policy that reduces the amount of money and loans in the economy is a contractionary monetary policy or a “tight” monetary policy. A monetary policy that expands the quantity of money and loans is known as an expansionary monetary policy or a “loose” monetary policy. Tight or contractionary monetary policy that leads to higher interest rates and a reduced quantity of loanable funds will reduce two components of aggregate demand. Conversely, a loose or expansionary monetary policy that leads to lower interest rates and a higher quantity of loanable funds will tend to increase business investment and consumer borrowing for big-ticket items. If loose monetary policy seeking to end a recession goes too far, it may push aggregate demand so far to the right that it triggers inflation. If tight monetary policy seeking to reduce inflation goes too far, it may push aggregate demand so far to the left that a recession begins. Note:- Do not provide handwritten solution. Maintain…
Which of the following is an appropriate monetary policy to combat a negative GDP gap? a. raise income tax rates b. increase government spending c. lower real interest rates d. raise real interest rates
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is monetary policies in dealing with the consequences of recession is better than the use of fiscal policies?

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	increase monetary base growth and decrease interest rates
	increase taxes and decrease government expenditures
	decrease monetary base growth and increase interest rates
	decrease taxes and increase government expenditures