"Under a regime of full monetary accomodation, if the output gap rises, " O Equilbrium money increases and the interest rate goes up Equilbrium money decreases and the interest rate goes down O Equilbrium money increases and the interest rate goes down O Equilbrium money decreases and the interest rate goes down O Equilbrium money increases and the interest rate stays constant

"Under a regime of full monetary accomodation, if the output gap rises, " O Equilbrium money increases and the interest rate goes up Equilbrium money decreases and the interest rate goes down O Equilbrium money increases and the interest rate goes down O Equilbrium money decreases and the interest rate goes down O Equilbrium money increases and the interest rate stays constant

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter4: Labor And Financial Markets

Section: Chapter Questions

Problem 31P: Table 4.6 shows the amount of savings and barrowing in a market for loans lo purchase homes,...

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Table 4.6 shows the amount of savings and barrowing in a market for loans lo purchase homes, measured in millions of dollars, at various interest rates. What is the equilibrium interest rate and quantity in the capital financial market? How can you tell? Now, imagine that because of a shift in the perceptions of foreign investors, the supply curve shifts so that there will be 10 million less supplied at every interest rate. Calculate the new equilibrium interest rate and quantity, and explain why the direction of the interest tale shift makes intuitive sense.
Suppose the Bank of Canada lowers its target for the overnight interest rate and longer-term interest rates in the market fall as a result. When this occurs, the commercial banks respond to in the demand for loans by.. O a An increase; selling government securities to the Bank of Canada in exchange for cash, with which they can extend new loans. An increase; borrowing cash from the Bank of Canada with which they can extend new loans. O c. An increase; buying government securities from the Bank of Canada, against which they can extend new loans. O d. A decrease; buying government securities from the Bank of Canada in exchange for cash, and calling in existing loans. O e. A decrease; selling government securities to the Bank of Canada and calling in existing loans.
QUESTION 2 Other things the same, when the price level rises, interest rates O a. fall, which means consumers will want to spend less on homebuilding. Ob.fall, which means consumers will want to spend more on homebuilding. O C. rise, which means consumers will want to spend more on homebuilding. Od.rise, which means consumers will want to spend less on homebuilding. QUESTION 3 Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have O a. lower than desired prices, which depresses their sales. O b. lower than desired prices, which increases their sales. O. higher than desired prices, which increases their sales. d.higher than desired prices, which depresses their sales.
Suppose a country is currently in a recession. What is the most likely response by the Federal government? O Increase the money supply Cut spending Raise the discount rate Cut taxes
Assume that a Cob-Dougls production functionis a god representaion of the economy, the substitution efecti stronger than the income efect an tht the economy was intaly at quirum. Suppose that Congress pases alaw that requires al orersto retre at g 72, nstead of 6. Hthe wage is fexble, what il happent uirium outpu? The equilbrium output level wi ncrease OThe euirium outut eve wil derese ( The equilibrium output level will emain constant Not enough information i gven to detemine the answer
The graph shows an economy's potential GDP and the aggregate supply curve. Draw an arrow that shows a rise in the price level when the money wage rate remains unchanged. Label it 1. Draw an arrow that shows a rise in the price level accompanied by the same percentage rise in the money wage rate and the money prices of other resources. Label it 2. What is the effect of an increase in the price level when the money wage rate remains unchanged? O A. Aggregate supply increases. O B. The quantity of real GDP supplied increases. Resource prices increase by the same percentage as the increase in the price level. O C. OD. Potential GDP increases. 145- 135- 125- 115- 105- 95- Price level (GDP price index, 2012=100) 85+ 18.0 Potential GDP A$ 22.0 Q 19.0 20.0 21.0 Real GDP (trillions of 2012 dollars) >>> Draw only the objects specified in the question.
Which of the following will NOT shift the ADTT curve? O a. A rise in consumer confidence O b. A rise in interest rates O c. A rise in government spending O d. A rise in exports
Which best describes why the multiplier exists? When people spend money, that money ends up in the pockets or bank accounts of other people or organizations, who then use that money in some way. O The multiplier exists because money spent today is always more valuable than money spent in the future, due to inflation and interest rates. When people see the government spending more money, they realize that the government thinks that prices are low; thus, they believe it is a good time to buy things. When people see other people spending money, they know that the economy is about to improve, leading them to spend more money.
1Why low rate inflation is considered necessary for economic grwoth? Oa It does not affect the purchasing power of wages Ob. It indicates that the currency is in continuous demand by the people Oc taffects only the rich and not the poor Od itact as an incentive to boost in supply in the economy 2When the economy is in Keynesian macroeconomic equilibrium, planned investment is greater than actual investment. O a False O b. True 3Government fixes the floor and ceiling price which will not allow the producers to increase the price on their wish, this is a type of. O a Physical control called price pegging O b. Monetary policy control measures O. Physical control called price tagging Od. Fiscal policy control measures O e None 4Rising output coupled with falling prices is called stagflation O a. False O b. True 5The Value of marginal propensity to consume lies O a. O to 1 O b. Less than zero Oc -1 to 1 Od. Between O to 1 6The Central Bank way to control inflation is Oa Monetary policy…
If a usury law limits interest rates to no more than 35, what would the likely impact be on the amount of loans made and interest rates paid?
In a monetary economy with flexible prices, a temporary contraction of the quantity of money will cause Select one: O a. An increase in the nominal interest rate O b. O c. A proportional fall in the price level More inflation in the future, unless it is accompanied by fiscal adjustment O d. two of the other
The diagrams show the monetary equilibrium and the demand for investment. The economy begins with money supply Ms, money demand Mp, and investment demand ID. The interest rate is in and desired investment is lo. Interest Rate % O A. interest rates will fall and the quantity of desired investment expenditure will fall. O B. interest rates will rise and the quantity of desired investr expenditure will fall. C. interest rates will rise and the quantity of desired investment expenditure will rise. O D. interest rates will fall and the quantity of desired investment expenditure will rise. 00 .O Ms a. Beginning at the initial equilibrium, suppose the Bank of Canada increases the money supply. In this case, Quantity of Money Mp Interest Rate % Desired Investment Q