When central bank sells securities in the open market, which of the following set of events is most likely tofollow? An increase in interest rates, an increase in the government budget deficit, and a movement toward tradesurplusA decrease in the money supply, an increase in interest rates, and a decrease in aggregateAn decrease in the money supply, an increase in interest rates, and an increase in aggregate demand.An increase in the money supply, an increase in interest rates, and a decrease in aggregate demand 19. When|central bank sells securities in the open market, which of the followingset of events is most likely to follow?A. An increase in interest rates, an increase in the government budget deficit,and a movement toward trade surplusB. A decrease in the money supply, an increase in interest rates, and a decreasein aggregate demand.C. An decrease in the money supply, an increase in interest rates, and an increasein aggregate demand.D. An increase in the money supply, an increase in interest rates, and a decrease inaggregate demand

Central bank is the apex of the banking and financial sector in the economy of the country which…

When central bank sells securities in the open market, which of the following set of events is most likely tofollow? An increase in interest rates, an increase in the government budget deficit, and a movement toward tradesurplus A decrease in the money supply, an increase in interest rates, and a decrease in aggregate An decrease in the money supply, an increase in interest rates, and an increase in aggregate demand. An increase in the money supply, an increase in interest rates, and a decrease in aggregate demand

When central bank sells securities in the open market, which of the following set of events is most likely tofollow? An increase in interest rates, an increase in the government budget deficit, and a movement toward tradesurplus A decrease in the money supply, an increase in interest rates, and a decrease in aggregate An decrease in the money supply, an increase in interest rates, and an increase in aggregate demand. An increase in the money supply, an increase in interest rates, and a decrease in aggregate demand

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter24: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 8PA

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Which of the following will lead to an increase in the equilibrium interest rate in the money market? a. Increase in general price level O b. An increase in income O c. Decrease in general price level d. The Central Bank increases money supply
25.Foraign exchange dealers expect the Canadian dollar next year to depreciate against all currencies. What is the effect on the quantity of real GDP demanded or aggregate demand in Canada? A. There is no change to either the quantity of real GDP demanded or to aggregate demand. В. Canadian aggregate demand increases. С. Canadian aggregate demand decreases. D. The quantity of Canadian real GDP demanded decreases. E. The quantity of Canadian real GDP demanded increases.
8. The goods and money markets are in equilibrium at point/s a. a b. b C. C d. a and b * y* Figure 1. •C LM IS Y 9. Which of the following statements relating to Figure 1 is/are correct? a. The money market is in equilibrium at point b. b. The goods and money markets are in equilibrium at point a. c. The goods market is in equilibrium at point a. d. All of the above
4. Suppose that people expect inflation to equal 3 percent, but in fact prices rise by 5 percent. Indicate whether this unexpected higher rate of inflation would help or hurt each of the following groups. a homeowner with a fixed-rate mortgage. a union worker with a fixed labor contract a company that has invested some of its endowment in a government bonds which pay a fixed rate of return. 5. Indicate how each of the following events would affect the aggregate demand AD curve: a short-run decrease in the price level an increase in consumer confidence on the price level and real GDP an increase in government purchases
18. Using AS-AD diagrams, illustrate each of the following economic situations by showing the patterns and shifts of either AS or AD that could cause them to happen: a. a rise in the price level triggered by higher oil prices; b. a rise in inflation that happens four years in a row because government spending keeps increasing; c. foreign investors gain confidence and increase the level of investment in the U.S. economy; d. the economies of trading partners grow very slowly, leading to a decrease in exports to those countries e. output declines slightly but the price level falls a great deal. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
18. Using AS-AD diagrams, illustrate each of the following economic situations by showing the patterns and shifts of either AS or AD that could cause them to happen: a. a rise in the price level triggered by higher oil prices; b. a rise in inflation that happens four years in a row because government spending keeps increasing; c. foreign investors gain confidence and increase the level of investment in the U.S. economy; d. the economies of trading partners grow very slowly, leading to a decrease in exports to those countries e. output declines slightly but the price level falls a great deal.
3. What impact will budget deficits have on the exchange rate value of the dollar? How will this impact net exports and aggregate demand? Explain
4. How does a decrease in foreign price levels affect domestic aggregate expenditures and demand?
3. Most global markets have been reporting severe contractions, which mainly responding to the COVID-19 pandemic. The situation is worsened by the decrease in people’s confidence in the government as policymakers, spreading a wave of pessimism towards the future prospect of the economy. Explain how such wave of pessimism, ceteris paribus, may lead to short-term economic fluctuations, which will eventually work to push the economy back towards its long-run equilibrium. Use relevant diagrams to support your answer.
Which of the following are examples of monetary policy that decrease aggregate demand? O A. a decrease in the quantity of money and an increase in interest rates O B. a decrease in taxes and a decrease in interest rates O C. an increase in transfer payments and an increase in interest rates O D. an increase in the quantity of money and a decrease in interest rates 身

1. In the diagram for this exercise, use aggregate demand and short-run and long-run aggregate supply curves to show an economy at a short-run equilibrium with a contrac- tionary gap of $0.5 trillion when potential output is $10 trillion.Then illustrate how the gap would close in the long run if the economy is self-correcting. 2. In the diagram, use aggregate demand and short-run and long-run aggregate supply curves to show an economy at a short-run equilibrium with an expansionary gap of $0.5 trillion when potential output is $10 trillion.Then illus- trate how the gap would close in the long run using an activist approach.
2. Country X, an open economy, has an increase in the demand for money which led to a significant increase in the real interest rates relative to the rest of the world. a. Explain how this increase in interest rates will affect each of the following for the Country X. i. Investment ii. The international value of its currency iii. Exports b. Using a correctly labelled aggregate demand and aggregate supply diagram, show how the change in investment you identified in part (a) will affect each of the following in the short run. i. Output ii. The price level (c). Identify one fiscal policy action that could counter the effect identified in part (b). Explain how this policy will affect each of the following. i. Output ii. The price level iii. Nominal interest rates (d). i. Identify one monetary policy action that could counter the effects identified in part (b). ii. Using a correctly labelled money market graph, show how this policy will affect nominal interest rates.