Which of the following is a monetary policy to combat a recession 1. cutting taxes. 2. increasing money supply. 3. increasing government spending. 4. decreasing money supply.
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- Which of the following reduces the interest rate? a. a decrease in government expenditures and a decrease in the money supply b. an increase in government expenditures and an increase in the money supply c. an increase in government expenditures and a decrease in the money supply d. a decrease in government expenditures and an increase in the money supplyEquilibrium in the money market occurs when Select one: a. the transactions demand for money equals the precautionary demand for money. b. the quantity of money demanded is more than the quantity of money supplied in the economy. c. the quantity of money demanded equals the quantity of money supplied in the economy. d. the quantity of money demanded is less than the quantity of money supplied in the economy.7. Recent monetary policy of the United States Which of the following are factors that contributed to the housing bubble of 2002-2006? Check all that apply. Low inflation A high federal funds rate Abundant and easily available credit from government-sponsored mortgage lenders An economic recession Quantitative easing of 2008 resulted in 7. Recent monetary policy of the United States Which of the following are factors that contributed to the housing bubble of 2002-2006? Check all that apply. Low inflation A high federal funds rate Abundant and easily available An economic recession Quantitative easing of 2008 resulted in Low inflation a slow growth and high inflation 7. Recent monetary policy of the United States a high growth and low inflation a high growth and low unemployment ssion a slow growth and high unemployment resulted in which can be explained by gage lenders Which of the following are factors that contributed to the housing bubble of 2002-2006? Check all that apply. F which…
- 23. Donald Trump passed a tax cut in 2018. According to economic principles, this policy will lead to: A. decrease the value of the dollar if U.S. interest rates fall enough. B. increase the value of the dollar if U.S. interest rates rise enough. C. increase the value of the dollar if U.S. income and the U.S. price level increase enough. D. increase the value of the dollar in all cases.2. Money supply, money demand, and adjustment to monetary equilibrium The following table shows a money demand schedule, which is the quantity of money demanded at various price levels (P). Fill in the Value of Money column in the following table. Quantity of Money Demanded Price Level (P) Value of Money (1/P) (Billions of dollars) 0.80 1.25 2.0 1.00 1.00 2.5 1.33 0.75 4.0 2.00 0.50 8.0 mon Now consider the relationship between the price level and the quantity of money that people demand. The lower the price level, the more the typical transaction requires, and the more money people will wish to hold in the form of currency or demand deposits. Assume that the Fed initially fixes the quantity of money supplied at $4 billion. Use the orange line (square symbol) to plot the initial money supply (MS1) set by the Fed. Then, referring to the previous table, use the blue connected points (circle symbol) to graph the money demand curve. 2.00 O 1.75 MS₁ 1.50 1.25 Money Demand 1.00 0.75 MS₂ 0.50…36. Investors in Bahrain are complaining that there is not enough credit that is being made available for them. Interest rates are low but still there are not many lenders of money who are willing to lend their money. What appropriate monetary policies can be implemented in this case? a.Decrease income taxes and increase government spending b.Increase cash reserve ratio and increase interest rates a little to encourage lenders c.Decrease cash reserve ratio and decrease interest rates a little to encourage lenders d.Decrease cash reserve ratio and increase interest rates a little to encourage lenders
- Question 12 If there is excess demand for money, then people will a. deposit more money into interest-bearing accounts, and the interest rate will fall. b. deposit more money into interest-bearing accounts, and the interest rate will rise. c. withdraw money from interest-bearing accounts, and the interest rate will fall. d. withdraw money from interest-bearing accounts, and the interest rate will rise.? 2. Money supply, money demand, and adjustment to monetary equilibrium The following table shows a money demand schedule, which is the quantity of money demanded at various price levels (P). Fill in the Value of Money column in the following table. Price Level (P) Value of Money (1/P) 0.80 1.00 1.33 2.00 kkkk Quantity of Money Demanded (Billions of dollars) 2.0 2.5 4.0 Now consider the relationship between the price level and the quantity of money that people demand. The lower the price level, the money people will wish to hold in the form of currency or demand deposits. typical transaction requires, and the Assume that the Fed initially fixes the quantity of money supplied at $2.5 billion. money the Oct 9 11:59 SQuestion 1 a. Identify the following graphs to relate - Money in excess and Money in Shortage. b. Explain in detail as when would you say money is inexpensive and expensive. Money supply The amount of money demanded (held) depends on interest rates. E1 Money demand 92 91 QUANTITY OF MONEY (billions of dollars) Money supply The amount of money demanded (held) depends on interest rates. Money demand 92 QUANTITY OF MONEY (bilions of dollars) INTEREST RATE (percent per year) INTEREST RATE (percent per year)
- 2. Money supply, money demand, and adjustment to monetary equilibrium The following table shows a money demand schedule, which is the quantity of money demanded at various price levels (P). Fill in the Value of Money column in the following table. Quantity of Money Demanded Price Level (P) Value of Money (1/P) (Billions of dollars) 1.00 2.0 1.33 2.5 4.0 2.00 4.00 8.0 Now consider the relationship between the price level and the quantity of money that people demand. The lower the price level, the Y money the typical transaction requires, and the y money people will wish to hold in the form currency or demand deposits.1.How is GDP affected by the nominal and effective interest rate? 2.In Fiscal policy, how is GDP, spending and tax affected? 3.What is the relationship between inflation and interest rates in monetary policy?Question 1 a. Increasing prices erode the purchasing power of the dollar. It is interesting to compute what goods would have cost at some point in the past after adjusting for inflation. Go to the Federal Reserve Bank of St. Louis, FRED database website at https://research.stlouisfed.org/fred2/and find the consumer price index for all urban consumers. What would a car that cost $25,000 today have cost the year 1996? b. Many countries have central banks that are responsible for their nation’s monetary policy. Go to www.bis.org/cbanks.htm and select one of the central banks (for example, ECB, Norway). Review that bank’s Web site to determine its policies regarding application of monetary policy. How does this bank’s policies compare to those of the U.S. central bank?