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Fiscal policy will have its greatest impact if monetary policy is __________.
3. When aggregate demand increases, firms with market power—like Walmart—are MOST likely to raise __________.
The money supply fell during the Great Depression because __________.
the monetary base also fell
the public held less currency, and the banks held less excess reserves
the public held more currency, and the banks held more excess reserves
the Fed did not yet exist
Concerning a stable equilibrium, on what issue is there an emerging consensus among economists?
the proximity to equilibrium that can be attained
how long the process toward a stable equilibrium takes
that markets do move toward a stable equilibrium
the government mechanisms that can aid the process to equilibrium
Explanation: Fiscal and monetary polices should be accommodating to each other in order to be effective.
Explanation: Firms with market power are price makers rather than price takers.
4. the public held more currency, and the banks held more excess reserves
Explanation: The currency to deposit ratio rose that time.
5. that markets do move toward a stable equilibrium
Explanation: There is a general consensus among economists that economy tends to reach a stable equilibrium.
Question 1 Fiscal policy will have its greatest impact if monetary policy is __________. contractionary expansionary...
Question 72 1 pts Suppose there is a policy mix of contractionary monetary policy and expansionary fiscal policy. This combination of policies must cause: a reduction in i. an increase in output (Y). a reduction in Y. an increase in the interest rate (i). an increase in consumption.
of a closed economy. when 6. According to the classical long-run macroeconomic model of a co decrease and government spending is unchanged a consumption and investment both increase b. consumption and investment both decrease c consumption increases and investment decreases d. consumption decreases and investment increases. 7. Suppose a business-friendly billionaire becomes president. As a result, businesses become optimistic about the future and more eager than before to increase their investment spending According to the classical long-run macroeconomic model of...
FISCAL POLICY IN-CLASS WORKSHEET 2 This question explores the role of expansionary and contractionary fiscal policy in the Aggregate Demand and Aggregate Supply model. You will use schedules for an aggregate demand line and an aggregate supply line to identify the equilibrium price level and real GDP in a macroeconomy. Additionally, you will compare the short-run equilibrium level of real GDP to the full employment level of real GDP to identify desirable fiscal policies. Below, you are provided the schedules...
Question 2 Explain how the effectiveness of contractionary monetary policy (dM Fiscal policy (dg <0) depends on the magnitude of the response of NX to in r or dNX/dr. Make sure to provide your answer with the relevant mathematical equations, and economic interpretation. points) Question Two: Assume the following equations summarize the structure of an economy. с =C, +0.7(Y - T) са = 2,000 - 50 т * 150 + 0.15Y (M/P) 0.3Y - 10r M/P 3,000 2,000 -10r G...
The government of Broncoland uses monetary policy tools similar to the Federal Reserve System of the United States and defines its monetary aggregates the same way as the Federal Reserve System of the United States. The required reserve ratio in Broncoland is 10%. The following information also applies to the government of Broncoland: Bank deposits at the central bank = $200 million Currency held by the public = $150 million Currency in bank vaults = $100 million Checkable bank deposits...
1) 2) 3) According to Keynes, the Great Depression was caused by ill-considered expansionary fiscal policy. inflation is always and everywhere a monetary phenomenon. the Phillips curve is stable. balancing the budget in the midst of a depression would be a serious mistake. none of the above Liquidity preference refers to the "random walk" behavior of consumption spending. real business cycle theorists' explanations for stagflation. Keynes' name for the demand for money. the controversy sparked by the Lucas critique. monetarists...
1) of 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 ful 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 very low B) the money demand will shift...
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a. an increase in taxes and/or an increase in government spending b. an increase in taxes and/or a decrease in government spending! c. a decrease in taxes and/or an increase in government spending d. a decrease in taxes and/or a decrease in government spending e. a decrease in government purchases and/or a decrease in transfer payments 2. An increase in income tax rates: a. makes...
The U.S. central bank that sets monetary policy and regulates the U.S. banking system is known as the: Select the correct answer Regional Central Bank The Federal Reserve Bank of New York The Congress Question 2 5 Points Which of the following is not a component of the Fed System? Select the correct answer Member Banks Federal Reserve District Banks Federal Open Market Committee Regional Committee Question 3 5 Points The function of setting reserve requirements and supervising member banks...
QUESTION 1 Which of the following is an example of an automatic fiscal policy stabilizer? a. Tax revenues fall as real GDP decreases. b. Congress decides to cut spending on national defense. c. Congress cuts individual income tax rates. d. Tax revenues rise after Congress raises corporate tax rates. QUESTION 7 When a country's economy is producing at a level that is less than its potential GDP, the standardized employment deficit will show a ________ than the actual deficit. a....