Explain the 4 ways the Federal Reserve would increase the money Supply and explain and graph how this would impact interest rates, consumption, investment, AD, GDP, Prices and Unemployment.
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Explain the 4 ways the Federal Reserve would increase the money Supply and explain
and graph how this would impact interest rates, consumption, investment, AD,
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- If the Fed wants to lower the interest rate, what should they do with the money supply? What tools do they have toincrease/decrease the money supply and what should they do to lower the interest rate?Imagine that the federal funds rate was above the level the Federal Reserve had targeted. To move the rate back towards itť's target the Federal Reserve could O sell bonds. This selling would reduce the money supply. O buy bonds. This buying would increase the money supply. O sell bonds. This selling would increase the money supply O buy bonds. This buying would reduce the money supply.Only typed answer and please don't use chatgpt _________________will cause the money demand curve to shift to the left and the nominal interest rate to decrease. a. A decrease in price b. An increase in money supply c. A decrease in money supply d. An increase in price
- What would be a way for the Federal Reserve to stimulate an economy that is sluggish? O A. print more money O B. encourage the stock market OC. buy back government bonds on the open market O D. sell more government bonds Click to select your answer.Explain whether each of the following eventsincreases or decreases the money supply.a. The Fed buys bonds in open-market operations.b. The Fed reduces the reserve requirement.c. The Fed increases the interest rate it pays onreserves.d. Citibank repays a loan it had previously takenfrom the Fed.e. After a rash of pickpocketing, people decide tohold less currency.f. Fearful of bank runs, bankers decide to hold moreexcess reserves.g. The FOMC increases its target for the federalfunds rate.what will happen to the interest rate vs quantity of money if the federal decides to decrease money suppy in response to concerns over inflation
- a. (i).Draw a graph showing equilibrium in the money market. Carefully label all curves andaxes and explainwhy the curves have the slopesthey do.(ii). Using the graph you prepared in a(i), illustrateand explain what happens when the Central Bankdecreases the money supply.(iii).When the Central Bankdecreases the money supply, theequilibrium level ofincome changes. Illustrate andexplain howA purchase of U.S. government securities by the Fed causes A. a multiple contraction of the money supply because deposits fall by more than the amount of the securities purchased. B. a contraction of the money supply equal to the amount of the securities because all other transactions occur within the banking system. C. an expansion of the money supply equal to the amount of the securities because all other transactions occur within the banking system. D. a multiple expansion of the money supply because the required reserve ratio is less than oneWhich of the following will not affect the money market? O a. Money supply O b. Price of one good c. Expansionary monetary policy O d. Contractionary monetary policy
- What effect would an increase in the discount rate have on the money supply? OIt would increase the money multiplier O It would cause the money supply to contract It would not affect the money supply It would cause the money supply to expandWhy does the Fed not target the quantity of money? The Fed does not target the quantity of money because _______. A. the Fed believes that it does not have enough control over the quantity of money because it is the banks that determine the quantity of loans and deposits B. the Fed believes that the quantity of money should remain constant C. Congress has passed laws that disallow this action by the Fed D. the Fed believes that if it changed the demand for money, the interest rate would fall and the growth of aggregate demand would slow down E. the Fed believes that the demand for money is too unstableIf the Fed sells $1 million of bonds and banks reducetheir borrowings from the Fed by $1 million, predictwhat will happen to the money supply