Answered: If the FOMC sells bonds, we would…

If the FOMC sells bonds, we would expect that the economy is facing ... Group of answer choices a. Either inflation or recession b. Recession c. Inflation

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Unemployment And Inflation

Section: Chapter Questions

Problem 4.10P

See similar textbooks

Related questions

Q: Q. Discuss the costs and benefits of inflation?

A: Inflation is the rate at which a currency's value falls and, as a result, the general level of costs…

Q: a) Why do some economists claim that we should not worry too much about inflation?

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: When the economy approaches full employment, why does demand-pull inflation become a problem?

A: Demand-pull inflation is the upward tension on costs that follows a lack in supply, a condition that…

Q: What happens when a central bank pursues inflation targeting? A. The policy actions that central…

A: Inflation targeting is defined as the monetary policy when the central bank set a particular…

Q: What do you mean by inflation? What are the causes of inflation?

A: The economies, and nations around the world work with the ultimate objective of achieving maximum…

Q: Define inflation, it's types, sources of inflation? What intervention measures are taken by the…

A: Inflation:- Inflation can be explained as the overall, steady rise in the price of items in an…

Q: The time inconsistency of policy implies that a. what policymakers say they will do is generally…

A: Time Consistency Policy: In this policy, an opportunity or the incentive to renege is lacked by the…

Q: A. Modified TRUE of FALSE. Write T if the statement is TRUE and CHANGE the underline word if the…

A: In an economy, inflation and interest rate are related to each other as a lower inflation will put…

Q: How is inflation measured? What problems does inflation brings? What is the cause of inflation?

A: Inflation is a term that is used to define the gap between the nominal level and the actual level of…

Q: Which of the following describes a situation in which the person is hurt by inflation? Select one:…

A: Inflation is an general increase in the overall price level.

Q: What is inflation targeting???

A: Inflation is the general increase in price of goods and services in an economy. Inflation is the…

Q: a. What does the term inflation mean? If meat prices go up, does this automatically mean that there…

A: Answer: Inflation: Inflation refers to the rate of increase in the price of a basket of goods and…

Q: 2. How does a very high rate of inflation affect individual spending and saving? Explain your…

A: Inflation Inflation refers to increase in the general price level of an economy. Inflation rate…

Q: In what cases we can use inflation instead of discount rate?

A: The inflation rate is the rate of increase in the general price level in the economy. It measures…

Q: Which of these is not a factor that causes demand-pull inflation? a. Private consumption b.…

A: Demand is the sum of the total quantity of commodities that the consumers are willing to purchase at…

Q: If the Federal Reserve Bank is concerned about high inflation, they should ____________ government…

A: Inflation is the increase in the general price level in the economy. The central bank of a nation…

Q: when the economy approaches fall employment why does demand pull inflation become a problem?

A: Full employment is a level of output at which aggregate demand is equal to the aggregate output.…

Q: Inflation targets are usually specified as a. a range for the inflation rate. b. a specific…

A: Inflation is referred to as general rise in the prices of goods and services which declines the…

Q: How does “people expecting inflation to happen” cause inflation?

A: Inflation: Inflation shows a sustained increase in the price of goods and services over a period of…

Q: What happens when a central bank pursues inflation targeting? A. The policy actions that…

A: When a central bank sets a certain inflation rate as its objective, this monetary policy is referred…

Q: When the Federal Reserve (U.S.) has caused the federal funds rate to increase, they likely were…

A: There are many tools that the Fed uses in order to control the supply of money within an economy.…

Q: Explain, Inflation: its nature, role and control in economy

A: In an economy, inflation is one of the variable that is considered as the flow concept because it…

Q: h inflation rates in recent years. How Pakistan can control the inflation? Compare the impact of…

A: When inflation is too high, then it is not considered to be good for the economy or individuals.…

Q: Which topic is more important fighting inflation or fighting a recession?

A: Inflation is the measure of increase in price level of a basket of consumption goods and services…

Q: Money demand is likely to increase the most during which part of the business cycle? OA. peak B.…

A: The business cycle refers to the recurring pattern of economic expansion and contraction that…

Q: With an illustration and rationale what is the category of inflation considered to be the most…

A: In summary, hyperinflation is the most severe category of inflation due to its catastrophic economic…

Q: a) Chose a tool the Central Bank (the Fed) might use to fight inflation. b) How would it be use? c)…

A: Most countries have a national bank which provides finance and other banking related services to its…

Q: y actions that central banks use to achieve the inflation target are kept se

A: Two main policy goals of the Central bank (also knows as dual mandate) are - Maximum sustainable…

Question

If the FOMC sells bonds, we would expect that the economy is facing ...

Group of answer choices

a. Either inflation or recession

b. Recession

c. Inflation

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Inflation rates, like most statistics, are imperfect measures. Can you identify some ways that the inflation rate for fruit does not perfectly capture the rising price of fruit?
A fixed-rate mortgage has the same interest rate over the life of the loan, whether the mortgage is for 15 or 30 years. By contrast, an adjustable-rate mortgage changes with market interest rates over the life of the mortgage. If inflation falls unexpectedly by 3, what would likely happen to a homeowner with an adjustable-rate mortgage?
What has been a typical range of inflation in the U.S. economy in the last decade or so?
If, over time, wages and salaries on average rise at least as fast as inflation, why do people worry about how inflation affects incomes?
If inflation rises unexpectedly by 5%, indicate foreach of the following whether the economic actor ishelped, hurt, or unaffected:a. A union member with a COLA wage contractb. Someone with a large stash of cash in a safedeposit boxc. A bank lending money at a fixed rate of interestd. A person who is not due to receive a pay raise foranother 11 months
The menu costs of inflation A. occur because businesses need to change prices frequently. B. occur because inflation uses up shoe leather. C. occur because real interst rates rise. OD. are not a problem with anticipated inflation.
When prices are falling, economists say that there is v a contraction. v disinflation. A. deflation. B. an inverted inflation.
Explain how inflation and income affect-consumer buying decisions.?
Which of the following is not an economic effect of inflation? a. None O b. Difficulty in doing long term contracts c. Savings increases consumption decreases O d. Income distribution in favour of borrower e. Decrease in purchasing power of income.
Which of these is not a factor that causes demand-pull inflation? a. Private consumption b. Population c. Government spending d. Supply side shocks
which of the following is true: 1. Ounanticipated inflation has small effect on the economy. 2. Opeople with fixed pensions will gain from inflation 3. Owith inflation, prices of inputs of production such as income of workers increases 4. Owhen we have anticipated inflation, interest rates decreases.
In which of the following conditions is the inflation rate likely to rise and the unemployment rate likely to fall? Select one: a. stagflation b. hyperinflation C. recession O d. boom