3. Consider the monetary neutrality. Suppose that the central bank changed the money supply. According to economists’ assumption on monetary neutrality, could the change affect the employment in the short-run? How about in the long-run? Short-run: Long-run:
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3. Consider the monetary neutrality. Suppose that the central bank changed the money supply. According
to economists’ assumption on monetary neutrality, could the change affect the employment in the short-run?
How about in the long-run?
Short-run:
Long-run:
Step by step
Solved in 2 steps
- Short run vs. Long Run a.Why on the long run, fiscal and monetary policies are not effective?Consider the money market. What happens and why to interest rates during an economic expansion (e.g., a decrease in Y)? Go through the complete process in detail explaining in words.What are two monetary policies that could be implemented by the central bank which would have the same impact as unemployment benefits? Which policy above including unemployment benefits would be most effective in boosting the economy due to a decrease in economic activity
- When does the present economy studies do or use? a. When interest rate is not given b. When time is not given c. When time is not given but interest rate is given d. When time is given but interest rate is not givenWhich one of the following is not the goals of Monetary policy? a. Low inflation O b. Low employment O c. Economic growth d. None e. Balance of Payment Clear my choiceWhat risk is due to changes in the level of interest rate in the economy and may affect industries at the same time? a.systematic risk b. inflation rate risk c.foreign exchange rate risk d.interest rate risk
- How do Financial Markets help the economy and how can it hurt the economy? Give examples2. What happens to domestic investment as the real interest rate rises? Explain your answerThe focus of the short-run macro model is on the role of a. spending in explaining economic fluctuations b. output in explaining economic fluctuations c. labor in explaining economic fluctuations d. financial markets in explaining economic fluctuations
- What is the purpose and workings of the Monetary policy transmission mechanism (MPTM)?What are the causes of time lag in MTPM, please discuss including some critical evaluation.1.The prices of both soft and hard commodities are very volatile. Explain why? 2. Explain the opportunity cost of holding money and how does it relate to the interest rates 3. What is the role of commercial banks in the economy? Why are they important?A change in money demand or a shift in the money demand curve is caused by a change in * the interest rate. non-interest determinants. cost of borrowing. all of the above
