Which of the following policies would NOT have the same general effect on 1 preal GDP and price level as the others?the Federal Reserve increases the discount ratethe government decreases tax ratesthe government decreases transfer paymentsthe Federal Reserve increases the reserve requirementthe government decreases purchases.

The real GDP is the value of all goods and services produced within the country at the given time…

Which of the following policies would NOT have the same general effect on real GDP and price level as the others? O the Federal Reserve increases the discount rate O the government decreases tax rates O the government decreases transfer payments O the Federal Reserve increases the reserve requirement O the government decreases purchases.

Which of the following policies would NOT have the same general effect on real GDP and price level as the others? O the Federal Reserve increases the discount rate O the government decreases tax rates O the government decreases transfer payments O the Federal Reserve increases the reserve requirement O the government decreases purchases.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Show the impact of the increase in government purchases on the interest rate by shifting one or both of the curves on the following graph. INTEREST RATE 12 10 8 2 0 0 20 Money Supply known as the Money Demand 40 60 80 MONEY (Billions of dollars) 100 120 = Money Demand Money Supply ? Suppose that for every increase in the interest rate of one percentage point, the level of investment spending declines by $0.5 billion. Based on the changes made to the money market in the previous scenario, the new interest rate causes the level of investment spending to by Taking the multiplier effect into account, the change in investment spending will cause the quantity of output demanded to by at every price level. The impact of an increase in government purchases on the interest rate and the level of investment spending is effect. Use the purple line (diamond symbol) on the graph at the beginning of this problem to show the aggregate demand curve (AD3) after accounting for the impact of the increase…
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
According to the logic of the investment demand curve in the IS model, which of the following statements is correct? Select one or more: Oa When R is equal to F, monetary policy is neutral and investment as a share of output Y is at the level determined by a,Y. O b. When R is equal to F, monetary policy is neutral and investment as a share of output Y is 0. The value of F is determined the marginal product of capital, a supply side feature of the economy Od. When R is greater than F, monetary policy is stimulating total spending.
Q13
Options are Increase/Decrease
The government wants to clamp down on "speculation" in the housing market. That means they want to reduce demand for housing so as to keep house prices down and from rising more. One policy that would help them would be to Raise short-term interest rates O Offer more generous mortgage interest tax deductions Raise the loan to value ratio (i.e., direct banks to allow lower leverage) Increase the money supply by 50%
Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply. O The size of the labor force O The level of technological knowledge The price level The inflation rate Suppose the economy produces real GDP of $40 billion when unemployment is at its natural rate. Use the purple points (diamond symbol) to plot the economy's long-run aggregate supply (LRAS) curve on the graph. 132 128 LRAS 124 120 116 Q112 + PRICE LEVEL
a) Which of the follwing monetary policy actions can be used to close an inflationary gap?O No change in the money supply to keep interest rates constant.ODecrease the money supply to decrease interest rates,OIncrease the money supply to increase interest rates.O Increase the money supply to decrease interest rates.O Decrease the money supply to increase interest rates. b) Assume the economy is initially at full-employment equilibrium. Suppose the economy slows down and uncertainty increases, reducing consumption and investment expenditures, in the short run, this shock willcause the economy to fall below full enployment. To move the economy to a full-employment equilibrium, the Fed could:O. decrease government spendingO. increase corporate tax ratesO. lower the federal fund rate targetO. increase government spending O. raise interest rates
Suppose the Bank of Canada lowers its target for the overnight interest rate and longer-term interest rates in the market fall as a result. When this occurs, the commercial banks respond to in the demand for loans by.. O a An increase; selling government securities to the Bank of Canada in exchange for cash, with which they can extend new loans. An increase; borrowing cash from the Bank of Canada with which they can extend new loans. O c. An increase; buying government securities from the Bank of Canada, against which they can extend new loans. O d. A decrease; buying government securities from the Bank of Canada in exchange for cash, and calling in existing loans. O e. A decrease; selling government securities to the Bank of Canada and calling in existing loans.
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.
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