The possible effect of an expansionary monetary policy would be _______. a. decrease in money supply and decrease interest rates b. increase in bank revenues through increase in investments c. increase in money supply and decrease in interest rates d. increase in interest rates and increase in money supply
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The possible effect of an expansionary
a. decrease in money supply and decrease interest rates
b. increase in bank revenues through increase in investments
c. increase in money supply and decrease in interest rates
d. increase in interest rates and increase in money supply
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- Money market equilibrium depends on what the central bank targets. How does the money market adjust to the equilibrium? If the central bank targets _______. A. the short-term interest rate, the quantity of money demanded adjusts B. the quantity of money demanded, the short-term interest rate adjusts C. the monetary base, the quantity of money supplied adjusts D. the quantity of money, the short-term interest rate adjustsWhat is the expected impact of a decline in the money supply to the US economy? A. Higher aggregate prices (inflation) B. Lower aggregate prices (deflation) C. There is no general relationship between the money supply and inflatonIn an economy where the central bank implements negative interest rates as a monetary policy tool, what is the most likely short-term impact on consumer savings behavior and bank profitability? A. An increase in consumer savings as people seek to safeguard their money and a rise in bank profitability due to increased lending. B. A decrease in consumer savings as the incentive to save diminishes and a decrease in bank profitability due to lower interest margins. C. No significant change in consumer savings behavior but an improvement in bank profitability due to lower borrowing costs. D. A shift in consumer investment towards riskier assets and challenges in bank profitability due to compressed interest margins. Please don't use chatgpt it is giving wrong answer and please provide valuable answer
- Expansionary monetary policy is when: None of the statements are correct. The president and congress agree to lower interest rates. The president orders the Federal Reserve to cut income taxes. The Federal Reserve reduces the regulations hindering our business community. The Federal Reserve increases the nation's money and credit supply and raises interest rates. A Moving to the next question prevents changes to this answer. JUL 21 tv 11 A O COMMUNITY16 A change in-----------leads to a change in-----------as well. a) the money supply indirectly; investment b) the interest rate; government purchases c) the money supply; government purchases d) consumption expenditures; the money supply1. Explain how to the Central Bank can reduce the money supply with open market operations. Show the impact of this contractionary monetary policy on the interest rate and discuss the implications to the economy. 2. Suppose the economy is in a recession with high unemployment. a. Identify a monetary policy that would restore the economy to its natural rate of employment and steady-state equilibrium output levels. Draw a graph of the money market to illustrate the effect of this monetary policy. Show the resulting change in the interest rate and discuss the implications. b. Identify a fiscal policy that would restore the economy to its natural rate of employment. Discuss the drawbacks and the benefits of this policy.
- Draw a demand for money curve. Label it MDo- Draw a demand for money curve that shows the effect of a decrease in real GDP. Label it MD,. Interest rate (percent per year) 8- Draw a demand for money curve that shows the effect of new financial technology that decreases the demand for money and that follows the decrease in real GDP. Label it MD,. What is the effect in the money market of a decrease in real GDP? 6- When real GDP decreases, A. there is a decrease in the quantity of money demanded. The opportunity cost of money increases B. there is an increase in the quantity of money demanded. The opportunity cost of money decreases O C. the quantity of money decreases O D. a decrease in the demand for money occurs 2- 2.6 2.8 3.0 3.2 3.4 Real money (trillions of 2005 dollars) >>> Draw only the objects specified in the question. Click the graph, choose a tool in the palette and follow the instructions to create your graph. DII F10 20 888 F9 F7 F8 F6 F5 F4 F3 esc F2 F1 $ % ! 8. 4 1 Y R Q W…he channels through which monetary policy affects economic activity are called the * allocational mechanisms of monetary policy. transmission mechanisms of monetary policy. distribution mechanisms of monetary policy. flow mechanisms of monetary policy. 17. Monetarists argue that * a weak link between nominal interest rates and investment spending implies monetary policy ineffectiveness. monetary policy affects aggregate demand solely through consumption. monetary policy affects aggregate demand solely through investment. monetary policy may affect aggregate demand through many channels. How can interest rates remain stable, with a constant rate of inflation and an increasing money supply? a. The money transmission mechanism does not apply in a situation of sustained inflation. b. The declining interest rates cause the investment demand curve to shift to the left, which causes interest rates to rise. c. The declining interest rates cause the investment demand curve to shift to the right, which causes interest rates to rise. d. The rising price level is increasing the demand for money, offsetting the impact of the rising money supply. e. The rising price level is decreasing the demand for money which is pushing interest rates up.
- A 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 oneThe Fed wants to decrease the money supply when the economy is booming and inflationary pressures ________ in the economy.An increase in the money supply will a. increase interest rates, increasing investment and aggregate demand. b. reduce interest rates, increasing investment and aggregate demand. c. increase interest rates, decreasing investment and aggregate demand. d. reduce interest rates, decreasing investment and increasing aggregate demand.