Question 3Suppose a central bank is committed to hitting a price level target. An unanticipated increase innominal spending will cause the price level to (relative to its previous trajectory). The central(relative to its previous trajectory) in order to hit its price level target.bank will respond byrise; increasing the money supplyrise; decreasing the money supplyfall; increasing the money supplyfall; decreasing the money supply

A strategy known as inflation targeting has been used by central banks, who set monetary policy, to…

Suppose a central bank is committed to hitting a price level target. An unanticipated increase in nominal spending will cause the price level to (relative to its previous trajectory). The central bank will respond by (relative to its previous trajectory) in order to hit its price level target. rise; increasing the money supply O rise; decreasing the money supply fall; increasing the money supply O fall; decreasing the money supply

Suppose a central bank is committed to hitting a price level target. An unanticipated increase in nominal spending will cause the price level to (relative to its previous trajectory). The central bank will respond by (relative to its previous trajectory) in order to hit its price level target. rise; increasing the money supply O rise; decreasing the money supply fall; increasing the money supply O fall; decreasing the money supply

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In the market for real output, the initial effect of an increase in the money supply is to O a. shift aggregate demand to the right O b. shift aggregate supply to the left O c. shift aggregate supply to the right O d. shift aggregate demand to the left
Using the simple monetary rule Rt-r=m(T-), if m=0.5 and the inflation rate is 2 percent below the target inflation rate, the Federal Reserve will A. raise the marginal product of capital by 1 percent. B. lower the interest rate by 1 percent. O C. raise the interest rate by 1 percent. OD. lower the marginal product of capital by 1 percent. O E. lower the target rate by 2 percent.
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What are the immediate effects and the long-run effects if the Fed changes the quantity of money? If the Fed changes the quantity of money, the immediate effects are on and the long-run effects are on O A. the short-term nominal interest rate; the price level and the inflation rate B. the price level; the real interest rate and the inflation rate C. the inflation rate; the long-run nominal interest rate and the real interest rate D. the price level; the inflation rate
and the real money If the inflation rate is higher than the rate of growth of the nominal money supply, the nominal money supply supply (M/P) O a. Stays constant; rises O b. Stays constant; falls O c. Rises; falls O d. Rises; stays constant mo thon
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The Fed sells treasuries when it wants to reduce the money supply. O True False
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In regard to monetary policies, nonactivists have various proposals. True or False: Some nonactivists believe in the Taylor rule, which suggests that the annual money-supply growth rate should be based on the growth rates of velocity and Real GDP to ensure that the price level does not fluctuate. O False O True Which of the following statements best explains the difference between the Taylor rule and the two other nonactivist rules (the constant-money growth rate rule and the predetermined-money growth rate rule)? O The Taylor rule does not take into account the stability of prices. O The Taylor rule suggests how much the money supply should grow. O The Taylor rule does not take into account the current state of the economy. O The Taylor rule is not a derivation of the equation of exchange.
Assume, in the 3rd quarter of 2018 in the U.S., the velocity of money was 3.08 and the M2 money supply was $1,050 million. The average prices in the economy was $1.44. Based on this, what was the real GDP of the U.S. in the 3rd quarter of 2018. O a. $2,750 million O b.$1,250 millon Oc. $2,000 million O d. 52.250 million
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