Assume that this country's Real GDP is already at the Potential GDP level an the Central Bank wants to counteract the change in private investment induced by the lower budget deficit in the previous question. What policy should the Central Bank pursue? O The Central Bank should perform a contractionary monetary policy, increasing interest rates and reducing the level of private investment, to avoid an overheated economy that would likely incur in inflation. O The Central Bank should perform a contractionary monetary policy, increasing interest rates and increasing the level of private investment, to generate higher growth without the risk of a high inflation. O The Central Bank should perform an expansionary monetary policy, reducing interest rates and increasing the level of investment, to generate higher growth without incurring in inflation. O The Central Bank should perform an expansionary monetary policy, reducing the interest rate and decreasing the level of investment, to avoid and overheated economy that would likely incur in inflation.

Assume that this country's Real GDP is already at the Potential GDP level an the Central Bank wants to counteract the change in private investment induced by the lower budget deficit in the previous question. What policy should the Central Bank pursue? O The Central Bank should perform a contractionary monetary policy, increasing interest rates and reducing the level of private investment, to avoid an overheated economy that would likely incur in inflation. O The Central Bank should perform a contractionary monetary policy, increasing interest rates and increasing the level of private investment, to generate higher growth without the risk of a high inflation. O The Central Bank should perform an expansionary monetary policy, reducing interest rates and increasing the level of investment, to generate higher growth without incurring in inflation. O The Central Bank should perform an expansionary monetary policy, reducing the interest rate and decreasing the level of investment, to avoid and overheated economy that would likely incur in inflation.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter36: Six Debates Over Macroeconomic Policy

Section: Chapter Questions

Problem 3PA

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Which of the following would be classed as an expansionary monetary policy? Ο Α. A decrease in the quantity of money. ОВ. A decrease in interest rates. C. An increase in government taxation. O D. An increase in government expenditure. O E. An increase in VAT.
1. Which of the following will shift the investment schedule to the left? O a. Decrease in autonomous investment spending O b. Decrease in autonomous spending O c. Increase in coefficient b O d. Decrease in coefficient k 2. 3. Which of the following will not affect the money market? O a. Money supply O b. Price of one good O c. Expansionary monetary policy O d. Contractionary monetary policy Government spending does not affect the investment schedule. O a. True O b. False; shifts investment schedule to the right O c. False; makes investment schedule steeper or flatter O d. False; shifts investment schedule to the left
Under what circumstances does aggregate demand increase? Aggregate demand increases if expected future income, inflation, or profits .And aggregate demand increases if fiscal policy government expenditure. O A. decrease; decreases O B. increase; decreases O C. increase; increases O D. decrease; increases Aggregate demand increases if fiscal policy taxes or transfer payments. O A. decreases; increases O B. decreases; decreases O C. increases; decreases O D. increases; increases Aggregate demand increases if monetary policy the quantity of money and interest rates. O A. increases; increases O B. increases; decreases O C. decreases; increases O D. decreases; decreases or foreign income Aggregate demand increases if the exchange rate O A. increases; decreases Click to select your answer. MacBook Air DD DII F11 F10 :こ- F9 F8 888 F7 吕0 F6 F5 F4 F3 F2 esc F1 & $ # 7 ! 2 3 4 1 P Y W E R Q K D F G A S 00 T
Consider the IS-LM model. The government wants to do fiscal policy either by raising government spending or lowering taxes. What will be the difference between these two approaches? O One will shift IS: the other will shift LM. One will raise consumption and the other will raise economic investment. O One will shift IS rightward; the other will shift IS leftward. O One is direct and the other is indirect. Question 8 Put the following tools of monetary policy in order, from earliest to latest, of when the Fed used them as their primary instrument. A. Open market operations B. Discount loans C. Interest paid on excess reserves O C. B.A OCAB OBAC OAB.C
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On June 5, 2003, the European Central Bank acted to decreasethe short-term interest rate in Europe by half a percentagepoint, to 2 percent. The bank’s president at the time, WillemDuisenberg, suggested that, in the future, the bank could reducerates further. The rate cut was made because European coun-tries were growing very slowly or were in recession. What effectdid the bank hope the action would have on the economy? Bespecific. What was the hoped-for result on C, I, and Y?
Which monetary policy tool can the Federal Reserve use to conduct an expansionary monetarypolicy (please state at least one instrument)? Which monetary policy instrument can the Fed useto conduct a restrictive monetary policy? Assume the country is experiencing highunemployment and a recession, such as during 2001, 2008-2009, and 2020. What is the Fedlikely to do in this scenario? Discuss the effects of such policy on the economy. Can you givea specific example to what the Fed did during any of those recessions? This is not a writing, it is economic.
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