Which one of the following statements regarding monetary policy is incorrect? O The SARB's main objective is to control the growth of the money stock. O Monetary policy in South Africa is implemented by the South African Reserve Bank (SARB). O The key decision-making unit is the Monetary Policy Committee of the SARB. O The key instrument of monetary policy is the repurchase rate (repo rate). The SARB pursues a formal inflation target, set by the Minister of Finance, in conjunction with the SARB.

Which one of the following statements regarding monetary policy is incorrect? O The SARB's main objective is to control the growth of the money stock. O Monetary policy in South Africa is implemented by the South African Reserve Bank (SARB). O The key decision-making unit is the Monetary Policy Committee of the SARB. O The key instrument of monetary policy is the repurchase rate (repo rate). The SARB pursues a formal inflation target, set by the Minister of Finance, in conjunction with the SARB.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Despite ongoing debates about the appropriateness of macroeconomic policies, many macroeconomists have reached a modern consensus on several important issues. Which of the following statements regarding monetary policy are true according to the macroeconomic consensus in the United States? Check all that apply. O Congress, not the Federal Reserve, should be in charge of monetary policy. O Monetary policy should focus on price stability. O Expansionary monetary policies should be used to keep unemployment below its natural rate.
Which of the following is a position held by monetarists? O Aggregate demand depends on the money supply and on velocity. The short-run aggregate supply curve is horizontal. The economy is unstable; wages and prices are inflexible. PRICE LEVEL The velocity of money is constant. Initially, the economy is in long-term equilibrium. Suppose there is a decrease in velocity-that is, there is a decrease in the average number of times a dollar is spent to buy goods and services. Show the long-run effect of this change according to the monetarist view, ceteris paribus, by dragging one or both curves on the graph below. REAL GDP SRAS AD AD SRAS (?)
In regard to monetary policies, nonactivists have various proposals. True or False: Some nonactivists believe in a predetermined-money growth rate, which suggests that the monetary authorities should target the proper federal funds rate before implementing monetary policies. O True O False Which of the following statements best explains the difference between the Taylor rule and the two other nonactivist rules (the constant-money growth rate rule and the predetermined-money growth rate rule)? O The Taylor rule does not take into account the stability of prices. O The Taylor rule is not a derivation of the equation of exchange. O The Taylor rule suggests how much the money supply should grow. O The Taylor rule does not take into account the current state of the economy.
Which of the following is a policy tool of the Federal Reserve that it actively uses to control the monetary base and conduct monetary policy? All of the other answers are correct. O Open market operations O Setting the reserve requirement O Setting the discount rate
Which of the following statement is true regarding the policy interest rate? Select one: O a. The policy interest rate is the benchmark rate that the central bank sets for loans to the commercial banks. O b. The policy interest rate is determined simply by the supply and demand of money in the market. O C. The spread (markup) represents how the central bank's money is distributed amongst the commercial banks. O d. The policy interest rate is the rate at which the commercial banks lend funds to each other.
Price stability: Suppose you are the head of the central bank and your mandateis to maintain the price level at a constant value. Explain what you would doto the money supply in response to each of the following events:(a) Real GDP increases by 4% during a boom.(b) Real GDP declines by 1% during a recession.(c) Real GDP is growing at 3% per year.(d) Te velocity of money increases by 2%.(e) Te velocity of money declines by 1%.
QUESTION 5 Which of the following statements is correct? O A. monetary policy was contractionary during the Great Recession and contractionary during the COVID Recession O B. monetary policy was expansionary during the Great Recession and expansionary during the COVID Recession O C. monetary policy was contractionary during the Great Recession and expansionary during the COVID Recession O D. monetary policy was expansionary during the Great Recession and contractionary during the COVID Recession
Which of the following policies would the Federal Reserve most likely use if the economy was suffering from high inflation? O Decrease the required reserve rate O Buy bonds in the open market O Decrease the interest rate the Fed pays on bank reserves O Raise the discount rate
Question 4Suppose a country’s inflation level is higher than desired, and unemployment levels arelower than expected – the central bank decides that the economy is ‘overheated’ andattempts to use the appropriate monetary policy to deal with the situation. Describe,with the help of the appropriate figure, how a central bank might go about implementingsuch monetary policy, the subsequent effects this has on interest rates, the quantity ofmoney in the market, and the process through which this affects the level of expenditurein the economy.
Which of the following statements is true? O The Fed has chosen the interest rate as its target instead of the money supply. O The Fed could simultaneously choose an interest rate and the money supply as its monetary policy targets. O The only monetary policy target the Fed can choose is the interest rate. O The Fed can not choose the money supply or the interest rate as both are determined by market equilibrium. O The only monetary policy target the Fed can choose is the money supply.
16. Keynes (1936) argued that, from a policy perspective, everything that can be achieved by a nominal wage cut can be more effectively achieved through an appropriate monetary policy. (a) Does this statement hold in the deﬁcient-demand Keynesian model for a negative shock to (i) aggregate demand and (ii) aggregate labor productivity? (b) Does this statement hold in the new Keynesian model for a negative shock to (i) aggregate demand and (ii) aggregate labor productivity?
If policymakers use contractionary monetary policy to reduce inflation in the short run: O they must be willing to accept a higher rate of unemployment. O the unemployment rate will be below the natural rate of unemployment. the unemployment rate will be above the natural rate of unemployment. O the unemployment rate will be at the natural rate of unemployment.