Match each tool with the appropriate policy decrease the reserve ratio increase taxes sell bonds increase government spending decrease the money supply and increase interest rates Deficit spending (lower taxes & increase spending) decrease the discount rate : Expansionary Fiscal Policy :: Contractionary Fiscal Policy : Expansionary Monetary Policy : Contractionary Monetary Policy

Match each tool with the appropriate policy decrease the reserve ratio increase taxes sell bonds increase government spending decrease the money supply and increase interest rates Deficit spending (lower taxes & increase spending) decrease the discount rate : Expansionary Fiscal Policy :: Contractionary Fiscal Policy : Expansionary Monetary Policy : Contractionary Monetary Policy

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The $2.2 trillion stimulus Coronavirus Aid, Relief, and Economic Security Act (CARE act) passed in March 2020 and the $2.3 spending bill of Consolidated Appropriations Act 2021 are the examples of applications of ____? A. Consumer Policy B. Fiscal Policy C. Monetary Policy D. None is correct.
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
Determine whether the following items are examples of expansionary fiscal policy, contractionary fiscal policy, expansionary monetary policy or contractionary monetary policy as they affect the aggregate demand of an economy. 1. A Significant treasury bond buyback *a. Expansionary fiscal policyb. Contractionary fiscal policyc. Expansionary monetary policyd. Contractionary monetary policy 2. Issuance of new treasury bonds at a higher interest rate *a. Expansionary fiscal policyb. Contractionary fiscal policyc. Expansionary monetary policyd. Contractionary monetary policy
The 'automatic mechanism' can best be described as using fiscal or monetary policies to stabilize the economy when it is not at potential. how the economy returns to potential GDP without any policy action. the result of monetary policy implemented by the Fed restoring full employment. how fiscal policy is used to return the economy to its potential.
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 sells bonds. Expansionary Monetary Policy 2. Congress cuts defense spending. Contractionary Fiscal Policy 3. The Federal Reserve raises the required reserve ratio. Expansionary Fiscal Policy 4. Congress increases payroll taxes. Contractionary Monetary Poli
QUESTION 5 05. The "crowding-out secondary effect expansionary macroeconomic policy a) For fiscal policy it is about government borrowing to finance the government budget deficit, associated with expansionary fiscal policy. This increased government borrowing tends to increase the market rate of interest, which dampens investment spending. b) For monetary policy it is about the expansion of the economy increasing the demand for money to service the increased volume of transactions. This tends to increase the market rate of interest, which dampens investment spending. c) Decreases the autonomous spending multiplier and thus the impact of expansionary policy. d) All of the above.
A country can use a combination of monetary and fiscal policies to stabilize or control their economy. Choose the most correct statement. O Only monetary policy can affect interest rates O Only fiscal policy can affect unemployment levels O Only monetary policy can affect the level of real GDP O The federal government is more active in monetary policy than fiscal policy 36
Fiscal Policy is conducted by:______________________, and Monetary Policy is conducted by:_______________________. The Fed Congress and the President
The time lag for monetary policy is typically ______________ the time lag for fiscal policy. a) shorter than b) about the same as c) longer than d) the same as
Based on the data in both Sets I and II Set I: Real GDP growth 0.7% Planned Gov. Expenditures $1600 b. Planned Gov. Revenues $1200 b. Gov. Debt at $ 4 trillion Set Il: M1 growth rate: 6% Discount rate changed to 3% O We don't have enough information to tell if either Fiscal policy or Monetary policy are being used O A Supply side approach is probably is being followed O We can tell that both Fiscal and Monetary Policy are being used to stabilize the economy O A laissez faire approach is probably being followed
In this activity you will need to match column B with column A. The notes you made on the legal framework of government's functions and operations will come in handy in completing this activity. Monetary policy Stabilisation policy Open market operations Inflation targeting ✓ Fiscal policy ✓ Cash reserve requirements ✓ Subsidies Government policy The Constitution Act of 1996 Public Finance Management Act 1 of 1999 Personal income tax (PIT) Value-added tax Excise duties Integrated Residential Development Program (RDP) Fiscal incidence analysis A. The reserve bank is obliged to pursue monetary measures aimed at maintaining inflation in the agreed target range, meaning the value of the currency needs to be protected B. This program is based on the development of integrated housing projects. It provides for the acquisition of land, servicing of stands for a variety of land uses including commercial, recreational, schools and clinics, as well as residential stands for low, middle and high…
11) If the investment demand curve is almost horizontal, A) both monetary and fiscal policy are ineffective. B) both monetary and fiscal policy are very effective. C) monetary policy is ineffective, but fiscal policy can be effective. D) monetary policy is effective.