19. If the Fed reduces the money supply to reduce inflation:a) the interest rate will increase, and the price of US exports will fall and the price ofUS imports willrise.b) the interest rate will increase, and the price of US exports will rise and the price ofUS imports willfall.c) the interest rate will increase, and the price of both US exports and US imports willrise.d) the interest rate will increase, and the price of both US exports and US imports willfall.

19. If the Fed reduces the money supply to reduce inflation: a) the interest rate will increase, and the price of US exports will fall and US imports will rise. b) the interest rate will increase, and the price of US exports will rise an US imports will fall. c) the interest rate will increase, and the price of both US exports and U rise. d) the interest rate will increase, and the price of both US exports and U foll

19. If the Fed reduces the money supply to reduce inflation: a) the interest rate will increase, and the price of US exports will fall and US imports will rise. b) the interest rate will increase, and the price of US exports will rise an US imports will fall. c) the interest rate will increase, and the price of both US exports and U rise. d) the interest rate will increase, and the price of both US exports and U foll

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5 3 2 MD 1 100 200 300 400 500 600 Real money (billions of 2005 yuks) The figure above shows the demand for money in Kiteland. a. If the Kiteland Central Bank has set the quantity of money so that the equilibrium interest rate is 4 percent, draw the supply of money curve. b. Suppose that Kiteland's Central Bank wants to raise the interest rate by 1 percentage point. By how much must it change the quantity of real money? c. In order to change the quantity of money to raise the interest rate by one percentage point, if the Central Bank uses an open market operation, does it make an open market purchase or an open market sale? Explain your answer. Inferest rate (percent per yen)
I would like to ask how to calculate c and d
Ceteris paribus, if the Fed was targeting the quantity of money supplied and money demand increased, the Fed would likely If the Fed was instead targeting interest rates and money demand increased, the Fed would likely O increase the money supply: decrease the money supply decrease the money supply: do nothing O increase the money supply: do nothing do nothing: increase the money supply do nothing: decrease the money supply
An increase in the money supply creates A. An excess supply of money that is eliminated by rising prices B. An excess supply of money that is eliminated by falling prices C. An excess demand for money that is eliminated by rising prices D. An excess demand for money that is eliminated by falling prices
2. Suppose that money demand is given by M' =$Y(0.25 – i), where SY is 100. Also, suppose that the supply of money is $20. The equilibrium interest rate is _ If the central bank wants to increase i by 10 percentage points (e.g. from 2% to 12%, the actual interest rate depends on result you calculate), it should set the supply of money at
If the Fed lowers interest rates, the value of the US dollar will___ which will lead do a(n)____ in spending on US goods. a) increase, decrease b) decrease , decrease c) decrease, increase d) increase, increase
If the Fed decided to decrease the Federal Funds Rate, (*the overnight rate that they lend to other banks) This means they are attempting to.. O Decrease the supply of money O Slow the economy because inflation is escalating O React to the trade war with China and restrict imports O Increase the supply of money
If the Fed wants to lower the interest rate, what should they do with the money supply? What tools do they have toincrease/decrease the money supply and what should they do to lower the interest rate?
Explain the Fed's policy tools and briefly describe how each works. The Fed uses its policy tools to _______. A. regulate the amount of money circulating in the United States by printing enough money each year for the purchase of consumer goods and services B. influence the exchange rate and the country's trade balance by adjusting the interest rate C. keep the government budget debt under $20 trillion by adjusting loans to Congress D. influence the interest rate and regulate the amount of money circulating in the United States by adjusting the reserves of the banking system
Figure: 6-1 Price Level D 0000 Refer to Figure 6-1. How would an increase in the money supply move the economy in the long run? from C to B from C to A Quantity of Output from C to A to C again from C to D
Suppose the Fed wants to increase the money supply. Which open market operation will achieve this goal? Buy government bonds from the private sector. Sell government bonds from the private sector. Increase the fed funds rate. O Lower the fed funds rate. O Increase unemployment benefits.
The following graph shows the money market in equilibrium at an interest rate of 6% and a quantity of money equal to $45 billion. Show the impact of the increase in government purchases on the interest rate by shifting one or both of the curves on the following graph.