(Analysis) Article 3 states that the Unemployment Rate was 3.7% in October. If the Natural Rate of Unemployment is 5%,what type of policy should the Federal Reserve use in order to bring the economy back to Long Run Equilibrium in theAD-AS model?Open market sales which will increase the interest rate.Open market purchases which will decrease the interest rate.Open market purchases which will increase the interest rate.Open market sales which will decrease the interest rate.

If the unemployment rate > the natural rate of unemployment, then the actual GDP is lower than…

what type of policy should the Federal Reserve use in order to bring the economy back to Long Run Equilibrium in the D-AS model? Open market sales which will increase the interest rate. Open market purchases which will decrease the interest rate. O Open market purchases which will increase the interest rate. O Open market sales which will decrease the interest rate.

what type of policy should the Federal Reserve use in order to bring the economy back to Long Run Equilibrium in the D-AS model? Open market sales which will increase the interest rate. Open market purchases which will decrease the interest rate. O Open market purchases which will increase the interest rate. O Open market sales which will decrease the interest rate.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose the Federal Reserve ("the Fed") shifts to an expansionary monetary policy by buying bonds through open-market operations. Assume that this policy is unanticipated. This problem will work through the short-run effects of this move. The following graph shows the money demand and money supply curves. Show the effect of the Fed's expansionary monetary policy by shifting one or both of the curves, and ignore any potential feedback effects. As a result of the Fed's policy, the interest rate to . Money DemandMoney Supply03006009001200150018006543210INTEREST RATE (Percent)QUANTITY OF MONEY (Billions of dollars)Money Demand Money Supply 900, 3 The following graph shows the demand for investment. Show the short-run effect of the Fed's expansionary monetary policy by shifting the curve or moving the point along the curve. Again, ignore any potential feedback effects. Be sure the new interest rate corresponds to the interest rate you have on the top graph.…
1. If LRAS = $500 billion, RGDP = $700 billion, and MPC = .8, then what should the Fed do? Be specific and list all three options. Also draw and label both the current situation and what would occur as the government impacted the economy through their actions. 2. What are the impacts in the short run of the above actions on the following: the market interest rate, the quantity of money demanded, investment spending, aggregate demand, potential output, the price level, and equilibrium RGDP.
Please complete the statements using the labels provided. Suppose that the Federal Reserve Bank wants to address high levels of unemployment in the economy. To do so, it would likely seek to increase If the Federal Reserve Bank is able to instigate the growth it desires, it will likely come at the cost of increasing Suppose that the Federal Reserve Bank achieves the growth it wants, but also experiences the negative consequences. As a result, it will seek to decrease nto a | , at the risk of leading the economy Answer Bank aggregate supply recession aggregate demand deflation inflation disinflation
Which of the following policies would the Federal Reserve most likely use if the economy was suffering from high inflation? O Decrease the required reserve rate O Buy bonds in the open market O Decrease the interest rate the Fed pays on bank reserves O Raise the discount rate
The following graph shows the money market in a hypothetical economy. The central bank in this economy is called the Fed. Assume that the Fed fixes the quantity of money supplied. Suppose the price level increases from 150 to 175. Shift the appropriate curve on the graph to show the impact of an increase in the overall price level on the market for money. INTEREST RATE (Percent) 18 15 12 60 3 0 0 15 Money Supply Money Demand 30 45 60 MONEY (Billions of dollars) 75 90 Money Demand Money Supply (?) After the increase in the price level, the quantity of money demanded at the initial interest rate of 9% will be supplied by the Fed at this interest rate. People will try to other interest-bearing assets, and bond issuers will find that they equilibrium at an interest rate of % than the quantity of money bonds and interest rates until the money market reaches its new their money holdings. In order to do so, people will
Suppose the Federal Reserve decreases the money stock. Which of the following statements describes the effect of monetary contraction on real GDP and the price level in the Long Run? A) The price level will further increase, and real GDP will return to its natural level. B) The price level will further increase, and real GDP will further increase above its natural level. C) The price level will further decrease, and real GDP will return to its natural level. D) The price level will further decrease, and real GDP will further decrease below its natural level.
Thank you
You are an economic adviser using the Fed model to analyze the economy. Now suppose that manufacturers in China face rising costs of rubber as an input. What is the effect on the economy? O an unchanged real interest rate, an unchanged output gap, and unexpected inflation a rise in the real interest rate, an unchanged output gap, and unexpected deflation O a rise in the real interest rate, rising output, and unexpected inflation an unchanged real interest rate, falling output, and unexpected inflation
Which of the following best explains why a large increase in the supply of bank reserves can have no effect on the equilibrium effective federal funds rate? The demand for bank reserves becomes perfectly elastic at the interest rate the Fed pays on reserves. The supply curve for bank reserves is upward sloping relative to the federal funds rate, The quantity of reserves demanded by banks is negatively related to the federal funds rate. O The supply of bank reserves become perfectly elastic at the primary discount rate set by the Fed.
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
What kind of monetary policy should the Fed use if the economy is currently in the northwest area of the bullseye chart? O Expansionary. ONeither expansionary nor restrictive O Restrictive O Expansionary and restrictive
FIGURE 1 MS P2 r2 P1 AD MD2 r1 MD1 REFER TO FIGURE 1. If the money-supply curve MS on the left-hand graph were to shift to the right, this would O create, until the interest rate adjusted, an excess demand for money at the interest rate that equilibrated the money market before the shift. All of the other answers are correct. O represent an action taken by the Federal Reserve. O shift the AD curve to the left.