MACRO ECON 6
6th Edition
ISBN: 9780357689820
Author: MCEACHERN
Publisher: CENGAGE L
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Question
Chapter 14, Problem 9P
To determine
Tools used by Federal Reserve to pursue
Introduction:
FED also known as the Federal Reserve System is the central bank of the United States of the America.
Monetary policy is the tool by which central bank of the country controls the monetary base in the country or economy. Central bank has many tools to pursue the monetary policy.
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Students have asked these similar questions
6.Fed is split over time of rate rise
In October 2009, the Fed was forecasting that
unemployment will average 9.8 percent in 2010 and said
the federal funds rate will remain "exceptionally low" for
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to worry about unwinding the $2 trillion in special credits
that have boosted the monetary base and to wonder if
the interest rate might need to start rising soon.
Source:
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Describe the time lags in the operation of monetary
policy and explain why they pose a challenge for the Fed
in deciding when to start raising the federal funds rate
target in a recession.
The time lag between the implementation of monetary
policy and the resulting change in the inflation rate is
approximately
This poses a challenge for the Fed in deciding when to
start raising the federal funds rate target in a recession
because.
А.
1
year;
if the Fed raises the federal funds rate too soon, it
could lengthen the recession
В.
a few…
19 The following is TRUE about monetary policy EXCEPT,
It relates to revenue and expenditure by government budget.
It manages the creation and flow of money and credit in the economy.
It aims to control the money supply and regulate the monetary sector.
It uses interest rate and money supply as monetary tools.
23. Which of the following is not a way that the United States government attempts to control the growth of the American economy and control for inflation?
A. by changing reserve requirements
B. by raising national debt
C. by changing interest rates
D. by changing money supply
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- 1- The Federal ________________________________________ (the Fed) is the primary force in determining our nation’s monetary supply. Its two goals are to help stimulate economic _________________________________________, and to keep inflation __________________________________. Often, it can’t do both at the same time. 1-Deficit reduction is not a ___________________________________ message; it just isn’t fun to talk about, so most politicians and the media don’t talk about it.arrow_forwardD3) Finance Can Some Please Help Me! On the 3rd of May the RBA increased the official cash rate by 0.25%. The current official cash rate as determined by the Reserve Bank of Australia (RBA) is 0.35%. Explain to Jaleel What are the channels through which the cash rate influences Monetary policy and how does the monetary policy transmit (contributes) to the overall economy?arrow_forwardV1arrow_forward
- Relevant knowledge is important because monetary policy affects all aspects of the economy as well as the functioning of the product and financial markets. Use a graph/chart to show the effects of a contractionary monetary policy to reduce inflation and move an economy back to potential real GDP.arrow_forwardDiop, Mame esign Layout References Mailings Review View Help 14.) 2020 was year the COVID-19 global pandemic. Specifically explain how both monetary and fiscal policy have been used in the United States as a reaction to date.arrow_forward{Fill in the blanks} Expansionary Monetary Policy is used to [Increase the GDP & Create Jobs / Decrease the GDP & Create Job] during a [Recession / Period of Inflation] . The Reserve will [Sell Bonds / Buy Bonds] which [Increase / Decrease] the money supply and [Increase / Decrease] interest rates. Borrowing becomes [More Expensive / Cheaper] so the GDP will grow.arrow_forward
- 4arrow_forwardMjarrow_forwardThe 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 decreases from 90 to 75. Shift the appropriate curve on the graph to show the impact of a decrease in the overall price level on the market for money. Glossary 18 Money Supply Money Demand Money Supply NTEREST RATE (Percent) 15 H i I 1:06 PM 4/29/2022arrow_forward
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