Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 33, Problem 2IAPA
To determine
To explain:
The similarity and the difference between the Fed's
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You will answer the following questions listed below. You will submit a Word document that will answer the following questions. Please submit your work using proper APA formatting.
What actions should the Fed take if it believes the economy is about to experience a high rate of inflation? Now, let’s assume you are the President of the Fed and you have to make certain decisions in our economy. If the Fed orders a contractionary monetary policy, describe what will happen to the following variables relative to what would have happened without the policy:
The money supply
Interest rates
Investment
Consumption
Net Exports
The aggregate demand curve
Real GDP
The price level
It should be minimum 3 word count with work cited page please.
Suppose that the U.S. economy is at full employment when strong economic growth in Asia increases the demand for U.S.-produced goods and services.
How the U.S. price level and real GDP will change in the long run if the Fed takes monetary policy actions that are consistent with its objectives as set out in the Federal Reserve Act of 2000?
Which of the following is not one of the three tools used by the fed to implement US monetary policies? Open market operations, reserve requirement regulations, printing more money, discount rate
Chapter 33 Solutions
Foundations of Economics (8th Edition)
Ch. 33 - Prob. 1SPPACh. 33 - Prob. 2SPPACh. 33 - Prob. 3SPPACh. 33 - Prob. 4SPPACh. 33 - Prob. 5SPPACh. 33 - Prob. 6SPPACh. 33 - Prob. 7SPPACh. 33 - Prob. 8SPPACh. 33 - Prob. 9SPPACh. 33 - Prob. 10SPPA
Ch. 33 - Prob. 11SPPACh. 33 - Prob. 1IAPACh. 33 - Prob. 2IAPACh. 33 - Prob. 3IAPACh. 33 - Prob. 4IAPACh. 33 - Prob. 5IAPACh. 33 - Prob. 6IAPACh. 33 - Prob. 7IAPACh. 33 - Prob. 8IAPACh. 33 - Prob. 9IAPACh. 33 - Prob. 10IAPACh. 33 - Prob. 11IAPACh. 33 - Prob. 12IAPACh. 33 - Prob. 1MCQCh. 33 - Prob. 2MCQCh. 33 - Prob. 3MCQCh. 33 - Prob. 4MCQCh. 33 - Prob. 5MCQCh. 33 - Prob. 6MCQCh. 33 - Prob. 7MCQ
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- The ultimate goal of U.S. monetary policy is: Interest rate stability. Economic growth with low inflation. Zero unemployment. A stable money supply. Steady growth in bank reservesarrow_forwardSuppose because of anticipated higher inflation in the near future, the Fed wants to decrease country’s money supply by $100 billion now. a) If the reserve ratio R = 10% and the Fed wants to use its open market operations policy tool, will it buy or sell U. S. government bonds? b) What would be the amount of bonds the Fed will buy or sell in the market? Show your calculations.arrow_forwardWhich of the following was not proposed as an explanation of why the effectiveness monetary policy was limited during and after the financial crisis of 2007-2009? A) recessions accompanied by financial crises tend to be severe. B) long levels of high unemployment had led to a reduction in the employment to population ratio that would be difficult to reverse. C) the Fed was reluctant to implement nonconventional policies. D) structural changes had taken because important sectors of the economy were deeply affected by the financial crisis. recessions accompanied by financial crises tend to be severe long levels of high unemployment had led to a reduction in the employment to population ratio that would be difficult to reverse. structural changes had occurred because important sectors of the economy were deeply affected by the financial crisis. the Fed was reluctant to implement nonconventional policies.arrow_forward
- The most effective tool of Monetary Policy at the Fed's disposal is Open Market Operations. the Required Reserve Ratio. the Discount Rate.arrow_forwardComment on the Fed's current monetary policy based on Powell's testimony.arrow_forwardExplain the sequence of links connecting an expansionary monetary policy with interest rates, intended investment, aggregate demand, and output.arrow_forward
- Describe how a central bank conducts a contractionary monetary policy to slow down the economy.arrow_forwardWhich of the following are objectives that the Federal Reserve tries to achieve when setting monetary policy? Check all that apply Economic growth Price stability Zero inflation Interest rate stabilityarrow_forwardWhat does the Taylor rule imply that policymakers should do to the fed funds rate under the following scenarios? Unemployment rises due to a recession. An oil price shock causes the inflation rate to rise by 1% and output to fall by 1%. The economy experiences prolonged increases in productivity growth while actual output growth is unchanged. Potential output declines while actual output remains unchanged. The Fed revises its (implicit) inflation target downward. The equilibrium real fed funds rate decreases.arrow_forward
- 41) The current chairman of the Federal Reserve System is A) Milton Friedman. B) Alan Greenspan. C) President Obama. D) Ben Bernanke. 42) The chairman of the Federal Reserve's Board of Governors A) controls the agenda of the Federal Open Market Committee meetings. B) is the main point of contact between the Fed and the President of the U.S. C) receives frequent background briefings on monetary policy issues from a large staff of economists and technical experts. D) All of the above answers are correct. 43) Most of the day-to-day power in monetary policy decisions lies with A) the President of the United States B) the Senate Banking Committee C) the chairman of the Board of Governors D) large commercial banks 44) On the Fed's balance sheet, assets include A) depository institutions deposits at the Federal Reserve and loans to depository institutions. B) U.S. government securities and loans to depository institutions. C)…arrow_forwardWhich of the following is NOT one of the three tools used by the Fed to implement US monetary policies? discount rate printing more money open market operations reserve requirement regulationsarrow_forwardIf the Fed was concerned about the economy falling into recession, it might accommodate this development by stimulating the economy through: raising the interest rate paid on reserves. purchasing additional government securities. conduct open market sales. raise the interest rates that consumers and businesses pay when taking out loans.arrow_forward
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