answers

watching

views

lemonbee607Lv1

8 Mar 2021

Explain the expansionary and contractionary monetary policy graphs as to how an increase in the cash rate from 1 % to 1.5% would help to keep inflation within the target rate, and how a further decrease from 1% to 0.75 % in the cash rate would help to stimulate the economy. Describe the circumstances in which the RBA Board might decrease and/or increase the cash rate in the future.

answers

watching

126

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

qamarmalik3098Lv10

29 May 2023

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Mahe AlamLv10

10 Mar 2021

Already have an account? Log in

Related questions

Under what economic conditions would the Fed wish to increase (expansionary policy) or decrease (contractionary policy) the money supply? How would an increase in the money supply likely affect interest rates, investment, aggregate demand, the price level, output, and employment? Why might monetary policy fail? What does inflation targetingmean?

skypanda530

These questions cover an expansionary monetary policy. Assume the textbook presentation where monetary policy works without any problem. Except for question 1, your answers can be a single word.

1) Give a brief summary of the macroeconomic circumstances that would lead the

Federal Reserve to engage in an expansionary policy.

2) Would the Fed buy or sell government debt assets with banks?

3) Would bank reserves increase, decrease or no change?

4) Will the monetary base increase, decrease or no change?

5) Will the supply of fed funds increase, decrease or no change?

6) Will the fed funds interest rate increase, decrease or no change?

7) Will the yield curve shift up or down?

8) Will longer term interest rates (e.g. 10-year T-Note) increase, decrease or no

change?

9) How are longer term interest rates determined?

10) In response to the change in longer term interest rates, will investment increase,

decrease or no change?

11) Will the growth rate of aggregate demand increase, decrease or no change?

12) Will the growth rate of aggregate supply increase, decrease or no change?

amaranthcrab430

5. Fiscal policy is enacted through changes in

A. interest rates and the price level.

B. the supply of money and foreign exchange.

C. unemployment and inflation

D. taxation and government spending.

6. In an economy, the government wants to decrease aggregate demand by $48 billion at each price level to decrease real GDP and control demand-pull inflation. If the MPS is 0.25, then it could

A. increase taxes by $16 billion.

B. increase taxes by $24 billion.

C. decrease government spending by $10 billion.

D. decrease government spending by $16 billion.

7. If there is a constitutional requirement to maintain a balanced budget, then during a recession when tax revenues are shrinking, the government will have to implement

A. contractionary fiscal policy.

B. no change in fiscal policy.

C. expansionary fiscal policy.

D. countercyclical fiscal policy.

8. Most economists believe that fiscal policy is:

A. better than the monetary policy for "fine-tuning" the economy.

B. better than the monetary policy for month-to-month stabilization.

C. not as good as the monetary policy for month-to-month stabilization.

D. not very good at pushing the economy in a particular direction.

9. An increase in the legal reserve ratio

A. increases the money supply by increasing excess reserves

B. decreases the money supply by decreasing excess reserves

C. increases the money supply by decreasing excess reserves

D. decreases the money supply by increasing excess reserves

10. The discount rate is the rate of interest at which

A. Federal Reserve Banks lend to commercial banks

B. savings and loan associations lend to some builders

C. Federal Reserve Banks lend to large corporations.

D. commercial banks lend to large corporations

11. Which of the following actions by the Fed most likely increase commercial bank lending?

A. raising the reserve ratio

B. increasing the federal funds rate target

C. reducing the interest paid on excess reserves held at the Fed

D. selling bonds to commercial banks and the public

12. Assume the economy is operating at less than full employment. An expansionary monetary policy will cause interest rates to ______, which will ______ investment spending.

A. decrease; decrease

B. decrease; increase

C. increase; increase

D. increase; decrease