1-Suppose the economy is in recession and the monetary policymakers lower interest rates in an effort to stabilize the economy. Use an aggregate supply and demand diagram to demonstrate the effects of a monetary easing when the transmission mechanisms are functioning normally and when the transmission mechanisms are weak, such as during a deep downturn or when significant financial frictions are present.

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4.This is a two-part assignment using the links below plus additional resources. Using the below links interpret the monetary and fiscal policies as either expansionary or contractionary. Define which school of thought supports each of the polices. Make sure to cite at least three sources either in MLA or APA style and have a minimum of 250 words. Here are some sources to get started https://www.whitehouse.gov/issues/budget-spending/ (Links to an external site.) https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

Quantitative easing can be described as A, B, C OR D ONE ANSWER A the purchase of long-term government and private mortgage backed securities by central banks to make credit available so as to stimulate aggregate demand. B the purchase of long-term government and private mortgage backed securities by central banks to make credit less available so as to stimulate aggregate demand. C the buy back long-term government and private mortgage backed securities by central banks to make credit available so as to decrease aggregate demand. D the buy back long-term government and private mortgage backed securities by central banks to make credit less available so as to decrease aggregate demand.

. How does monetary policy affect aggregate demand? a) By influencing consumer spending only b) By influencing investment spending only c) By influencing both consumer and investment spending d) By influencing government spending only -. A central bank uses contractionary monetary policy to: a) Combat deflation

1A.) What do researchers mean when they ask “Why does monetary policy have real effects on the economy?" 1B.)Use the evidence in the table (image) to discuss the research main findings and its implications for macroeconomic policy.

14. Of the following secondary effects which dissipate the strength or effectiveness of expansionary Keynesian macroeconomic policy, which one is associated with rising interest rates because of greater government borrowing to finance a budget deficit?     a) Crowding out effect     b) Inflation     c) transactions demand for money     d) sovereign debt crisis     e) All the above

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11. Which policy tool involves the federal reserve setting a short-term interest rate to lend directly to financial institutions? a. The fed funds rate b. The discount rate c. The interest rate paid on excess reserves d. The rate of required reserves 12. Suppose the federal reserve announces a policy of purchasing short-term bonds from the financial system. This policy is an example of a. Expansionary monetary policy through open market operations designed to decrease the federal funds rate b. Contractionary monetary policy through open market operations designed to increase the federal funds rate