In general, if the Fed increases its target for the federal funds rate, O A. short- term nominal interest rates will not change and long - term nominal interest rates increase. O B. short - term nominal interest rates will increase and long- term nominal interest rates will also increase. C. short- term nominal interest rates will not change and long - term nominal interest rates will also not change. O D. short - term nominal interest rates will increase and long - term nominal interest rates will not change.

In general, if the Fed increases its target for the federal funds rate, O A. short- term nominal interest rates will not change and long - term nominal interest rates increase. O B. short - term nominal interest rates will increase and long- term nominal interest rates will also increase. C. short- term nominal interest rates will not change and long - term nominal interest rates will also not change. O D. short - term nominal interest rates will increase and long - term nominal interest rates will not change.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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What do you expect will happen to the price level and real GDP in the short run when the bank of Canada buys domestic government bonds given a positively sloped SRAS curve? Select one: O a. Both the price level and real GDP will cross out increase. O b. Both the price level and real GDP will decrease. cross out O c. The price level will increase while real GDP cross out will decrease. O d. The price level will decrease while real GDP cross out will increase. O e. There is no change either to the price level or cross out the real GDP
If money supply increases 10%, and we assume a constant money velocity: O We should have a price increase of 10% in the short-run, and an output increase of 10% in the long-run. O We don't have enough data to answer. O Price and output increase by 10% in the long-run. O Price and output increase by 5% in the long-run. O We should have an output increase of 10% in the short-run, and a price increase of 10% in the long-run.
28 of 38 Which of the following statements is true? O A. If the market for money is in equilibrium, then the bond market is in disequilibrium. O B. As the interest rate increases, the opportunity cost of holding money decreases. O C. An increase in the money supply could ultimately lead to the money demand curve to shift rightward. O D. A higher level of income causes the demand for money at each interest rate to increase and the demand curve to shift to the left. Unsure
Assume contractionary monetary policies have had the effect of lowering inflation rates from a 6% annual rate down to 2%. What do economists call this drop in inflation? O a. Deflation. O b. Inflation. O c. Devaluation. d. Depreciation. O e. Disinflation.
4 Which of the following policies did the Fed follow after 2014? O To unwind expansionary policy measures and try to return to a normal stance of policy. O To get the economy out of a recession. O To stimulate the U.S. financial and banking systems. O To lower interest rate in an attempt to stimulate economic growth. O None of these. 5 The recent use of discretionary fiscal policy was facilitated by O the elimination of the balanced budget amendment. O the ineffectiveness of monetary policy. O changing beliefs among economists about the lags of monetary policy. O the use of automatic policy rules. O the prediction of high rates of unemployment that could otherwise occur in the future if government did nothing. 6 For real and potential GDP to be equal, the budget surplus has to be zero. O True O False
You are an economic adviser using the Fed model to analyze the economy. Now suppose that manufacturers in China face rising costs of rubber as an input. What is the effect on the economy? O an unchanged real interest rate, an unchanged output gap, and unexpected inflation a rise in the real interest rate, an unchanged output gap, and unexpected deflation O a rise in the real interest rate, rising output, and unexpected inflation an unchanged real interest rate, falling output, and unexpected inflation
If Janet expects interest rates to rise in the near future, she will probably be willing to Select one: O a. maintain only the current holding of bonds. O b. O c. buy bonds now, and hold less money. put her money under her mattress rather than in a bank account. O d. buy bonds now, but only if their price falls. O e. sell bonds now, and hold more money.
The reserve requirement is 10%. Suppose that the Fed sells $100,000 worth of U.S. government securities from a bond dealer, electronically debiting the dealer's deposit account at Reliable Bank. Which of the following correctly describes the immediate effect of this transaction on the money supply? O A. The money supply decreases by $1,000.000. O B. The money supply decreases by $100,000. O C. The money supply decreases by $90,000. O D. There is no change in the money supply. O E. None of the above.
Consider a situation where the central bank increases the money supply. All other things being equal, if nominal GDP increased by $800 billion during a time when velocity was 4, by how much did the central bank increase the money supply? O $200 million $400 billion $400 million $200 billion
Which of the following statements best explains why the money demand curve slopes downward? Select one: O a. At high interest rates, the opportunity cost of holding money is low, so people want to hold more. O b. As GDP increases, the demand for money tends to decrease, resulting in a negatively sloped curve. At low interest rates, the opportunity cost of holding money is low, so people want to hold more. O d. At high interest rates, people want to hold more money, so they don't have to borrow to make purchases.
According to the Taylor rule, the federal funds target rate O a. increases; increases O b. increases; decreases Oc. decreases; increases O d. decreases; decreases as inflation increases and when GDP increases, all else equal
Suppose the current real federal funds rate in the economy is 3.0%, the current inflation rate is 1.5%, the Federal Reserve's target inflation rate is 2.0%, and the output gap is -2.0%. According to the Taylor Rule, the Federal Reserve's target federal funds rate should be Select one: O a. 3.25%. O b. 3.75%. O c. 2.5%. O d. 2.75%.