Macroeconomics
Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Chapter 31, Problem 41APA

(a)

To determine

Identify the economic status of September 2012.   

(b)

To determine

Identify the impacts of the Fed’s QE3 and the other stimulate activities on the economy.

(c)

To determine

Determine the risks arising from greater monetary stimulus.

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Helicopter Money​ Primer: The possible next frontier in quantitative easing      Central banks—the ​Fed, the Bank of​ Japan, the European Central​ bank, the​ People's Bank of​ China, and others—have bought trillions of dollars of bonds. The Fed alone has bought​ $4 trillion-worth.    ​Source: Daily​ FX, July​ 15, 2016   What are the​ Fed's policy tools and which policy tool did the Fed use to increase its assets to​ $4 trillion? The​ Fed's policy tools include​ ______.     A. the required reserve​ ratio, discount​ rate, and government expenditure   B. extraordinary crisis​ measures, marginal tax​ rates, and the discount rate   C. the required reserve​ ratio, discount​ rate, and open market operations   D. open market​ operations, marginal tax​ rates, and government expenditure   To increase its assets to​ $4 trillion, the Fed used​ _______.     A. a printing press to print more currency   B. required reserve ratios   C. the discount rate…
"Fed Chair Jerome Powell said he supports a traditional quarter-point increase in the Federal Reserve's benchmark short-term interest rate when the Fed meets later this month, rather than a larger increase that some of its policymakers have proposed." - ABC News, March 2, 2022 If the Federal Reserve increases the Federal Funds Rate this month, then which of the following is likely to happen in the US economy? Money supply will decrease and aggregate demand will decrease Money supply will increase and aggregate demand will increase Money supply will decrease and aggregate demand will increase Money supply will increase and aggregate demand will decrease
4. The hypothetical information in the following table shows what the values for real GDP and the price level will be in 2017 if the Fed does not use monetary policy. Year Potential GDP Real GDP Price level 2016 $17.7 trillion $17.7 trillion 114 2017 18.1 trillion 17.9 trillion 116 If the Fed wants to keep real GDP at its potential level in 2017, should it use an expansionary policy or a contractionary policy? Briefly explain your answer. b. Suppose the Fed's policy is successful in keeping real GDP at its potential level in 2017. State whether each of the following will be higher of lower than if the Fed had taken no action. а. I. Real GDP II. Potential GDP III. The inflation rate IV. The Unemployment rate c. Draw an AD and AS graph to illustrate your answer. Be sure your graph contains LRAS , SRAS, and AD curves for 2016 and 2017, with and without monetary policy action.
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