Jumbers and Graphs: Monetary Policy (Ch 15)PRICE2₁2NQUANTITYSRASAD2AD₁Which of the following best describes the situation shown on the graph?O Contractionary monetary policy that removes the economy from an inflationary gapExpansionary monetary policy that is ineffective at changing Real GDPO Expansionary monetary policy that is destabilizingO Expansionary monetary policy that removes the economy from a recessionary gap

Aggregate demand (AD) refers to the total quantity of goods and services that all sectors of an…

umbers and Graphs: Monetary Policy (Ch 15) PRICE QON QUANTITY SRAS AD₂ AD₁ Which of the following best describes the situation shown on the graph? Contractionary monetary policy that removes the economy from an inflationary gap O Expansionary monetary policy that is ineffective at changing Real GDP O Expansionary monetary policy that is destabilizing O Expansionary monetary policy that removes the economy from a recessionary gap

umbers and Graphs: Monetary Policy (Ch 15) PRICE QON QUANTITY SRAS AD₂ AD₁ Which of the following best describes the situation shown on the graph? Contractionary monetary policy that removes the economy from an inflationary gap O Expansionary monetary policy that is ineffective at changing Real GDP O Expansionary monetary policy that is destabilizing O Expansionary monetary policy that removes the economy from a recessionary gap

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter27: Issues In Macroeconomic Theory And Policy

Section: Chapter Questions

Problem 2P

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7:511 Price level LRAS SRAS AD Real GDP 33) Refer to Figure 15-6. In the figure above, if the economy is at point A, the appropriate monetary policy by the Federal Reserve would be to lower tax rates. B) raise interest rates. c) lower interest rates. D) raise income taxes. 241 Whirh of the frllnwinn dacrihac what the Fard B I U west the a q w er ty uio p a s dfghjk I z x c v b n m 123 space return !!
In 2006, the Federal Reserve System decides to lower the money supply and raise interest rates in order to combat inflation, which caused investment spending for housing to fall. As a result, a change in investment spending for housing shifts the AS curve to the right, causing equilibrium price level to fall and equilibrium Real GDP to increase. O AS curve to the left, causing equilibrium price level to rise and equilibrium Real GDP to decrease. AD curve to the left, causing equilibrium price level to fall and equilibrium Real GDP to fall. AD curve to the right, causing equilibrium price level to rise and equilibrium Real GDP to increase.
On June 5, 2003, the European Central Bank acted to decreasethe short-term interest rate in Europe by half a percentagepoint, to 2 percent. The bank’s president at the time, WillemDuisenberg, suggested that, in the future, the bank could reducerates further. The rate cut was made because European coun-tries were growing very slowly or were in recession. What effectdid the bank hope the action would have on the economy? Bespecific. What was the hoped-for result on C, I, and Y?
You have been hired as a Marco Economist by the President of the United States to help evaluate the recentannouncement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again.Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer thefollowing questions. Provide a graphical explanation for your answers whenever possible. 1. What is the fed trying to do?A. slow down the economyB. stimulate the economyC. remains unchanged 2. How is the fed doing it?A. buying bondsB. selling bondsC. remains unchanged 3. What happens to bond prices?A. increaseB. decreaseC. remains unchanged 4. What happens to the interest rate?A. increaseB. decreaseC. remains unchanged
Exercise 1 a) Use the equation for the circular flow of the real economy to give an overview of thedemand side components and tie players in the macroeconomy to each of thesecomponents.b) How can you use the equation for the circular flow to discuss the effect of fiscal policyand monetary policy?c) As a follow up from part b), discuss the statement: “During the pandemic, expansionarymonetary policy did not boost the economy as expected”.d) For the following two cases, use the equation for the real interest rate to give anexample for each case using numbers for real interest rate, nominal interest rateand inflation. Explain each number you select.Case 1: A situation where it is a real cost if you borrow money.Case 2: A situation where it is a real gain if you borrow money.e) Let GDP (Gross Domestic Product) as a simplification, only be one good, apples. Find theGDP deflator if nominal GDP = 100 and real GDP = 20 and explain these three numbersusing apples as an example.f) As a follow up…
options:a contractionary fiscala contractionary monetarya recessionaryan expansionary fiscalan expansionary monetary an inflationaryequal to greater thangrew inflationless thanrecededthe same asunemployment
How has the Federal Reserve used monetary policy and how has the Federal Government used fiscal policy to lessen the impact of the COVID-19 recession? A) The Federal Reserve has expanded the money stock while the Federal Government has decreased its spending. B) The Federal Reserve has contracted the money stock while the Federal Government has decreased its spending. C) The Federal Reserve has contracted the money stock while the Federal Government has increased its spending. D) The Federal Reserve has expanded the money stock while the Federal Government has increased its spending.
Scenario FROQ In 2019 the federal government decreased interest rates for banks three times. Shortly after, POTUS tweeted the following Would be so00 great if the FED would further lower interest rates and quantitative ease. The Dollar is very strong against other currencies and there is almost no inflation. This is the time to do it. Exports would zoom! December 17, 2019 A. Define the type of economic policy inferred by scenario and describe how it impacts the economy. B. Describe why POTUS has no power to control the implied power inferred to by the scenario above. C. Describe how a change in political party leadership could effect the outlined scenario above.
Suppose that when everyone wakes up tomorrow, they discover that thegovernment has given them an additional amount of money equal to the amountthey already had. Explain what effect this doubling of the money supply willlikely have on the following:a. The total amount spent on goods and servicesb. The quantity of goods and services purchased if prices are stickyc. The prices of goods and services if prices can adjust?
Which of the following are examples of monetary policy that decrease aggregate demand? O A. a decrease in the quantity of money and an increase in interest rates O B. a decrease in taxes and a decrease in interest rates O C. an increase in transfer payments and an increase in interest rates O D. an increase in the quantity of money and a decrease in interest rates 身