D. do nothing. On August 1, 2016, Colombo Co.'s treasurer signed a note promising to pay $480,000 on December 31, 2016. In an open economy, changes in monetary policy affect both interest rates and exchange rates. Who controls each? Explain the pros and cons of each policy. Is this appropriate given the state of the economy? How could a bank earn easy profits? What are the pros and cons of using contractionary and expansionary monetary policy tools under the following scenarios: recession, depression, and robust economic growth? Activists hold that: a. activist monetary policy is flexible. What is the Australian government's fiscal policy stance in the current phase of the business cycle? Which of the following combinations of economic policy objectives is most likely to lead to a financial crisis? Explain fully why the monetarist school claims that monetary policy is stronger than fiscal policy in stabilizing the economy to reduce recession and inflation? Government policies reduce macroeconomic stability. List and discuss any two (2) tools of monetary policy. Prime rate b. What is the opportunity set? 1. What is the difference between American and European terms for quoting currencies? B. consumption. Explain briefly. Expansionary monetary policy can have immediate real short-run effects; initially, no prices have adjusted. 68% average accuracy. D. automatic stabilizers. D. none of the above. Government's incurring debt is part of fiscal policy. Q: Refer to Table 10.4. b. one year. e. investment spending. 0. The local university has developed an eight-step process for screening the thousands of admissions applications it gets each year. True or false? • c. the rate banks charge each other to borrow money. The Fed reduces the reserve ratio. 24x7 Online Chat Support. In what way does the "Impossibility Triangle" help explain the monetary and macroeconomic policies of a country like Hong Kong or Panama? Consumption falls. For Prelims: MPC- composition, objectives and functions. Monetary Policy Tools. If most countries adhered to a system of fixed exchange rates, global inflation would be lower. An example of expansionary fiscal policy would be. Open market operation b. Monetary policy More questions than answers. How will the Federal Reserve's changes to monetary policy impact the condition of the U.S. economy? What were the expected benefits of the policies adopted? The tools of monetary policy include open market operations, the discount rate, and the reserve requirement. Assume that the Fed adopts an inflation targeting strategy. A. As a tool of monetary policy, the reserve requirement is problematic because: A. c. discount rate. You are allowed two attempts Explain how the Federal Reserve might carry out a "tight" monetary policy. 01/11/1985. Describe how they use the three tools, reserve requirements, open market operations (Federal Fund rates), and Discount Rates. traded and a non-traded sector in each country, optimal independent monetary policy cannot. Answers to 17 Multiple choice/ short answer questions on multiplier model, recession, automatic stabilizers, budget deficit, money, reserve ratio, currency to deposit ratio, Monetary policy, stimulate aggregate demand, expansionary monetary policy, AS/AD model, Countercyclical monetary policy, nominal interest rates, real interest rates, recessionary gap, autonomous expenditures, Crowding out, … a. Raise the discount rate. b) Buy government securities through open market operations. Describe TWO (2) policies in which a government might influence private investment in order to ensure sufficient economic growth in a country. Why? Usually, the MPC meets six times a year. Use an AD-AS framework to show the effect of monetary restriction on the level of output, prices, and the interest rate in the medium and the long run. Calculate the discount rate used by the lender. Monetary policy is difficult when interest rates are low. Explain, in detail, what happens to yield when cash rate does up and down. b. from dues paid to it by member banks. 1-How much money can Bank A creat... T-bills are issued by the US government to cover the following except: A. their deficits. Performance & security by Cloudflare, Please complete the security check to access. Discuss the significant risks to the economy when formulating monetary policy. When banks need funding for just a few days, they would most likely do what? As of 13 June 2019, the latter replaced the target range for the three-month Swiss franc Libor previously used in the SNB's monetary policy strategy. Question 1 . Contractionary monetary policy would most likely result in A. increased investment. The three monetary policy tools include all of the following except: a. If the Federal Reserve sells securities on the open market, how are the purchases of U.S. financial assets by foreigners and the international value of the dollar impacted? c. Macroeco... Monetary policy in the US, especially the desire to increase interest rates, will have international repercussions. It's not like Feds will forcefully demand banks to buy bonds. How will the interest rate, investment spending, co... What does the political business cycle imply for the debate over policy rules? Preview (19 questions) Show answers. How was fiscal and monetary policy used to reduce the recessionary gap during the last recession? Governments closely monitor the growth and contraction of their economies in order to manage the well-being of their citizens.
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