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 short run, what would be the result of an increase in the monetary base? Assume the reserve ratio is unchanged. O a. Demand for money decreases. Ob. Demand for money increases. O c. Quantity demanded of money decreases. O d. Price level decreases. O e. Nominal interest rate falls.
When households and firms start selling off their bonds, which of the following will be the result? a. The market price of bonds increases. O b. The money demand curve shifts leftward. C. The nominal interest rate falls. O d. The nominal interest rate rises. е. The money supply curve shifts leftward.
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Suppose the central bank is using monetary policy in an attempt to hold real GDP permanently above potential GDP. With this policy decision, O a. Inflation is not a problem, but unemployment is. O b. Inflation will accelerate over time. O c. Inflation can be kept at a low, constant rate. O d. The central bank will fail to achieve its goal. O e. The AD curve will shift leftward to cure the inflation problem.
Expansionary monetary policy is when: None of the statements are correct. The president and congress agree to lower interest rates. The president orders the Federal Reserve to cut income taxes. The Federal Reserve reduces the regulations hindering our business community. The Federal Reserve increases the nation's money and credit supply and raises interest rates. Moving to the next question prevents changes to this answer. O JUL 21 tv 10 ^ O
The misperceptions theory concludes that: O A. in the short run, unanticipated monetary changes are neutral but anticipated monetary changes are not neutral, B. in the short run, both anticipated and unanticipated monetary changes are not neutral. Oc. unanticipated monetary changes are not neutral in either the short run or the long run. O D. in the short run, anticipated monetary changes are neutral but unanticipated monetary changes are not neutral.
The frequency with which bills are passed within an economy is also known as the: O velocity of money O exchange rate O volume of money O money supply
The monetary multiplier is 3 and the change in the monetary base is $100,000. How much will the quantity of money increase? O a. $300,000 O b. $70,000 c. $200,000 O d. $100,000 O e. $33,333
Please answer the following in 5 minutes I’m trying to study.
In regard to monetary policies, nonactivists have various proposals. True or False: Some nonactivists believe in a predetermined-money growth rate, which suggests that the monetary authorities should target the proper federal funds rate before implementing monetary policies. O True O False 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 is not a derivation of the equation of exchange. 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.
Suppose the U.S. economy is in equilibrium at a potential output of $10 trillion so that unemployment is at the natural rate. At the beginning of the year, the Federal Reserve announces that its monetary policy will aim to maintain output at potential output and sustain the current price level throughout the year. Firms and workers negotiate annual wage and resource price agreements based on the belief that the Fed is committed to price stability. The following graph shows the aggregate demand curve (AD), the long-run aggregate supply curve (LRAS), and the short-run aggregate supply curve (SRAS) at an expected price level of 120. Now suppose that several months later, the Fed abandons its stated goal of price stability and shifts toward an expansionary monetary policy. On the following graph, show the short-run effect of this policy by shifting the appropriate curve or curves. Note: Select and drag one, both, or all of the curves to the desired position. Curves will snap into position,…