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Option D. When there is recession in the economy and unemployment rate in the economy is high, then the Central Bank of Kuwait will follow expansionary monetary policy because this will increase aggregate demand and help in reduction of unemployment in the economy.
Option A. When interest rate is set at avery low rate, then opportunity cost of holding money which is interest rate is very low.
Option B. Monry Supply and Interest rate are the targets of the Central Bank.
Option C. When aggregate expenditure in the economy is less than Real GDP, then inventories increase which will signal firms to decrease production and this will decrease Real GDP in the economy.
1) of the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision...
Macroeconomic Multiple Choice Questions Answer All 10 Questions* 1) If the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision is based on A) the fact that the economy is at full employment B) Expectation of excessive inflation in the future C) the fact that the economy is in an expansion D) Unemployment level is high 2) When the interest rate is set at a very low rate A) the opportunity cost of holding money is...
5) If consumption increases by $200 and, in response, equilibrium aggregate expenditure increases by $600, the multiplier is A) 5 B) 0.5.C)2. D) 0.3. 6) When the GDP in Kuwait rises relative to the GDP in other countries, will fall and will fall A) exports; imports B) exports; net exports C) imports; net exports D) net exports; imports 7) An increase in the price level will A) shift the aggregate demand curve to the left. B) shift the aggregate demand...
7) An increase in the price level will A) shift the aggregate demand curve to the left. B) shift the aggregate demand curve to the right. C) move the economy up along the aggregate demand curve. D) move the economy down along the aggregate demand curve. 8) Expansionary monetary policy involves A) reducing money supply and lowering taxes B) increasing money supply to decrease interest rate C) increasing government spending and cutting money supply D) increasing the interest rate and increasing taxes 9) Long-run macroeconomic equilibrium occurs when A) aggregate demand...
What determines the magnitude of the changes in price level when central bank takes monetary policy measures that leads to a change in the aggregate demand? a. Changes in the money supply b. Slope of the aggregate supply curve c. Rate of change of interest rate d. Total money supply in the economy
Other things being equal, if the central bank undertakes expansionary monetary policy, we expect the aggregate demand curve to shift to the right. the aggregate demand curve to shift to the left. the economy to move up along the aggregate demand curve without a shift. the economy to move down along the aggregate demand curve without a shift.
If the Fed orders an expansionary 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
QUESTION 4 In February 2014, South Africa had an inflation interest rates in January and is expected to increase or maintain the interest rates through 2014. The South African central bank is pursuing rate of 5.9 % and an unemployment rate of 24.1%. The South African central bank raised a(n): contractionary monetary policy to contain inflation. expansionary monetary policy to contain inflation. expansionary monetary policy to fight unemployment. contractionary monetary policy to fight unemployment QUESTION 5 When the economy is sluggish, the Fed will: raise interest rates, which...
2. Suppose the economy is in long-run equilibrium, with real GDP at $19 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases money supply by 6%. a) Illustrate the short-run effects of the monetary policy by using aggregate demand-aggregate supply model. Be sure to indicate the direction of change in real GDP, the price level and the unemployment rate. b) Illustrate the long-run effects of the monetary policy by using aggregate demand-aggregate supply model....
A central bank implements a contractionary monetary policy over worries that inflation will undermine further economic growth. Demonstrate the effect this policy has on the economy by shifting the aggregate demand (AD) curve in the appropriate direction Provide your answer below: Price Level Aggregate Supply Aggregate Demand Real GDP
Describe the channels by which monetary policy ripples through the economy and explain how each channel operates. Suppose the Bank of Canada raises the overnight loans rate. When the Bank of Canada raises the overnight loans rate, it makes an open market Other short-term interest rates and the exchange rate rise. The quantity of money and the supply of loanable funds decrease The long-term real interest rate rises The higher real interest rate decreases consumption expenditure and investment. The exchange...