LEARNING OBJECTIVE: Distinguish between characteristics of expansionary policy and contractionary policy. Which of the following is associated with contractionary monetary policy? O a.) Lowering the discount rate b.) Increasing the reserve requirement O c.) Buying Federal Treasury bonds d.) Increasing taxes

LEARNING OBJECTIVE: Distinguish between characteristics of expansionary policy and contractionary policy. Which of the following is associated with contractionary monetary policy? O a.) Lowering the discount rate b.) Increasing the reserve requirement O c.) Buying Federal Treasury bonds d.) Increasing taxes

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(1) Why would a company’s financial managers wantto pay attention to the federal funds rate? (2) Ratherthan promising to support any too-big-to-fail banks,could the federal government instead simply warneveryone that doing business with one of these firmsis risky? Why or why not?
1) Which of the following is false? O A) The COVID-19 pandemic ended the longest economic expansion in US history. O B) 1928 the Federal Reserve raised the discount rate from 3.5% to 5%. O C) The Great Depression took over ten years to recover. D) 2004 - 2006 The Fed dropped the Federal Funds Rate to 0.5%. E) The Emergency Banking Act took the US off the gold standard.
According to this theory of the term structure, bonds of different maturities are not substitutes for one another. Select one: O a. Segmented markets theory O b. Expectations theory O c. Liquidity premium theory O d. Separable markets theory
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
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.
sters 13,14,15,16 ss2023 Price Level FI Multiple Choice Figure 15.6 (Figure 15.6) Which of the following Fed actions is most likely to decrease the aggregate demand curve from AD2 to AD₁? O O 2 S W Real Output decreasing the reserve requirement lowering the discount rate F2 buying bonds in the open market H Q Search. *m AS AD₂ AD₁ # 3 A E D 4) $ 4 R F Pll 45 % FS T G PrtScn J F8 * 8 Home 1 M F9 ( 9 K End F10 O ) PgUp 0 L F11 P dtv Help PgDn F12 { Seve & Em 1 + =
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.
For all the questions below select the appropriate answer: a) An open market purchase by the Bank of Canada would result in: O a fall in the excess reserves held by commercial banks. a rise in the bank rate. O an increase in commercial bank reserves and an expansion of bank lending and deposits. a fall in the money supply as commercial banks reduced their loans and deposits. b) When a central bank sets an inflation rate target as the primary goal of monetary policy: O it must also set a fixed exchange rate target that is independent of its inflation target. it must also set a money supply target that is independent of its inflation target. O it must also accept the money supply, exchange and interest rate consistent with its inflation target. it must accept and support the government budget target set by the Minister of Finance. c) The Bank of Canada would use an SPRA when: a temporary excess supply of monetary base puts downward pressure on the avemight interest rate. a temporary…
If the economy is currently experiencing 10% inflation, which Monetary Policy changes should the Federal Reserve implement (used)? Select all that apply O increase the reserve requirement O lower the reserve requirement O increase the discount rate O lower the discount rate O sell bonds on the open market O buy bonds on the open market O O O O O O
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%.
Consider a market for an imported good. There are no domestic producers. The market supply function is assumed to be upward sloping and the market demand function is assumed to be downward sloping. There is no market failure in the beginning. The government is considering imposing a tariff or a quota to increase tax revenue. Bear in mind that producer surplus is not considered as part of social welfare since they are all foreigners. a. 8% With the help of a diagram, identify the effects on consumer surplus, producer surplus and social welfare with the imposition of tariff.b. 8% With the help of a diagram, identify the effects on consumer surplus, producer surplus and social welfare with the imposition of quota, whereas the quota equals the market quantity in part a. c. 4% As an advisor to the government, which option will you recommend? Briefly explain in the lights of efficiency????
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