Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 14, Problem 14CQ
To determine
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Relevant knowledge is important because monetary policy affects all aspects of the economy as well as the functioning of the product and financial markets. how does monetary policy impact economic activity?
what kind of monetary policy can be used to fight against recession and depression
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Economics: Private and Public Choice (MindTap Course List)
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- a) Identify the four major tools of monetary policy. b) How can monetary policy address the problem of inflation?arrow_forwardIn what situation is the use of Monetary Policy not effective? In all situations monetary policy is effective. When the economy experienced excessive economic growth When the economy experiences a very severe recession When the economy experiences stagflationarrow_forwardPlease explain three main objectives of monetary policy?arrow_forward
- List four mechanisms which the central bank might use to implement a contractionary monetary policy, and outline how they would work.arrow_forwardDescribe the cornerstone of monetary policy?arrow_forwardWhat is the basic objective of monetary policy? What are the major strengths of monetary policy? Why is monetary policy easier to conduct than fiscal policy?arrow_forward
- What are the objectives of monetary policy? and what are the goals of monetary policy in harmony or in conflict (a) in the long run and (b) in the short run?arrow_forwardWHAT ARE THE GOALS OF MONETARY POLICY?arrow_forwardDescribe three ways in which the interest rate changes implemented in an expansionary monetary plan by the Fed would work their way through the economy in order to improve economic conditions. How would changed interest rates affect business, households, governments, and those involved in imports/exports?arrow_forward
- Why did inflation targets replace monetary targets as the most widely used strategy for monetary policy in advanced economies? 100-150 wordsarrow_forwardIf the central bank desired to increase spending in the economy, using the instruments of monetary policy, explain how the central bank can indirectly achieve this.arrow_forwardMonetary policy isn't always effective: Why couldn't monetary policy pull us out of the Great recession? The Great Recession officially lasted from December 2007 to June 2009. But the effects lingered on for several years thereafter, with slow growth of real GDP and high unemployment rates. These effects all occurred despite several doses of expansionary monetary policy. Not only did the Fed push short- term interest rates to nearly 0%, but it also engaged in several rounds of quantitative easing, purchasing hundreds of billions of dollars' worth of long-term bonds. Therefore, what are three possible reasons why monetary policy was not able to restore expansionary growth during and after the Great recession?arrow_forward
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