When there is a problem of a delay in terms of implementation of the fiscal policy, that would be categorized as _____. execution lag information lag decision lag Fiscal policy nowadays are focused on eliminating GDP gap True False When the Central Bank controls the money supply by controlling the amount of high-powered money in the economy, that is called _____. interest rate fixation selective credit control open market operations required reserves ratio policy

When there is a problem of a delay in terms of implementation of the fiscal policy, that would be categorized as _. execution lag information lag decision lag Fiscal policy nowadays are focused on eliminating GDP gap True False When the Central Bank controls the money supply by controlling the amount of high-powered money in the economy, that is called _. interest rate fixation selective credit control open market operations required reserves ratio policy

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter16: Monetary Policy

Section: Chapter Questions

Problem 19SQ

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Describe the Fiscal Policy and the monetary policy and explain how The two policies are used to control money supply in the economy.
Which of the following statements is false? It might sometimes make sense for a government to combine an expansionary monetary policy with an expansionary fiscal policy. If spending is very responsive to changes in interest rates, and the demand for money is interest inelastic, then monetary policy tends to be more powerful than fiscal policy. It would never make sense for a government to combine an expansionary monetary policy with a contractionary fiscal policy. If spending is not very responsive to changes in interest rates, and the demand for money is interest elastic, then fiscal policy tends to be more powerful than monetary policy
A country's central bank is engaging in monetary contraction, with M going from M0=40 to M1=20. Its economy is as follows. Goods: slc = 3 MPC = 0.7 G = 10 T = 9 Before the policy, the goods market equilibrium is at Y0 = 54. Financial: I = 18-200r Before the policy, the loans market equilibrium is at r = 4.25% and I = 9.5 Money: M0 = 40 P0 = 2 M/P = 0.02 / (r - Y/5000)^2 and finally, Labor: w = MPL = 0.5 * 4.5 * 16^0.5 / L^0.5 w = EP / P0 * L^0.5 Where workers currently expect the price level of EP=2. How does the monetary contraction directly and immediately affect the goods market? There are four endogenous variables that adjust in response to shock/policy: Y, I, r, P. The policy variable of interest is M. Therefore, let's approach our solution by first recognizing that all other letters are just constants and plug them in. For example: Y = 2 + 0.5(Y-6)+7+I becomes Y = 12 + 2*I First, express the goods market as expenditure being a linear function of investment I of the form: Y = a…
A country's central bank is engaging in monetary contraction, with M going from M0=40 to M1=20. Its economy is as follows. Goods: slc = 3 MPC = 0.7 G = 10 T = 9 Before the policy, the goods market equilibrium is at Y0 = 54. Financial: I = 18-200r Before the policy, the loans market equilibrium is at r = 4.25% and I = 9.5 Money: M0 = 40 P0 = 2 M/P = 0.02 / (r - Y/5000)^2 and finally, Labor: w = MPL = 0.5 * 4.5 * 16^0.6 / L^0.5 w = EP / P0 * L^0.5 Where workers currently expect the price level of EP=2. - There are four endogenous variables that adjust in response to shock/policy: Y, I, r, P. The policy variable of interest is M. Therefore, let's approach our solution by first recognizing that all other letters are just constants and plug them in. For example: Y = 2 + 0.5(Y-6)+7+I becomes Y = 12 + 2*I First, express the goods market as expenditure being a linear function of investment I of the form: Y = a + b*I 1. How does the monetary contraction directly and immediately affect the…
The Federal Reserve System’s Board of Governors and the Federal Government both maintained contractionary monetary and fiscal policies during the last economic expansion. For the purposes of this essay, assume that recent economic data shows that the economy is still growing at a fast rate. Identify and explain in detail the three monetary policy tools that the Board of Governors could use to fix this rapid expansion and the two fiscal policy tools that the Federal Government could adopt Please answer correct explain please asap please Don't answer by pen paper plz.
Q.1.18 The implementation lag is for monetary policy and for fiscal policy. (1) Extremely short; long; (2) Long; extremely short; (3) Long; long; (4) Long; short.
What is the advantage of monetary policy over fiscal policy? O. Monetary policy can be implemented faster than fiscal policy O. Once implemented, the effect of monetary policy can be realized faster than fiscal policy O. The monetary policy affecting Investment category, which is more flexible than the Consumption and Government expenditure category O. Monetary policy is more effective at reducing the recessionary/inflationary gap
YEAR POTENTIAL GDP REAL GDP PRICE LEVEL 2020 $1500 billion $1500 billion 100 2021 $1590 billion $1560 billion 105 Refer to the table above to answer the questions below: a) Explain whether a contractionary or an expansionary fiscal or monetary policy should be implemented in 2021. b) Based on you answer to part a) above, identity one monetary and fiscal policy instrument. c) If the economy is successful in keeping real GDP at its potential level in 2021, state whether each of the following will be higher, lower, or the same if this economy had taken no action. i Real GDPii Potential GDPiii The inflation rateiv The unemployment rate d) Now let us suppose that real GDP in 2021 was higher than the potential GDP in 2021. What would your answer to part a) and part b) be under this scenario?
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
Suppose the government undertook a fiscal policy by increasing government expenditure by 20 percent. Clearly demonstrate how this would result in the crowding out phenomena.c. Suppose the instead of fiscal policy, the government, through its monetary authority undertook an expansionary monetary policy by increasing nominal money supply by 20 percent. Clearly demonstrate how this would result in the crowding in phenomena.
The flatter the money demand curve and the steeper the investment demand curve, the greater the impact of monetary policy on national income True False In a severe economic recession, monetary policy would likely be a better method of stimulating the economy than fiscal policy. True False If a chartered bank decided to keep ten percent excess reserves, the magnitude of the money multiplier would decrease. True False
Assume there is a desire to reduce unemployment in an economy. Describe two (2) expansionary fiscal policy measures and two (2) expansionary monetary policy measures you would recommend to reduce the rate of unemployment. Explain how each measure would help the problem Also explain how each of these measures would affect inflation.