An econometric study of the dynamics of monetary policy using U.S. data covering three decades indicates that OA the IS-LM model accurately captures the short-run behavior of the economy in response to these policies. -OB. the IS-LM model fails completely to predict the economy's short-run response to policy changes. OC. only the long-run behavior of the economy is accurately captured by the IS-LM model. OD. use of the IS-LM model for prediction purposes is basically a risky or uncertain estimate The predictive reliability of the IS-LM model appears to weaken over time because the assumption of a given price level becomes realistic less more

An econometric study of the dynamics of monetary policy using U.S. data covering three decades indicates that OA the IS-LM model accurately captures the short-run behavior of the economy in response to these policies. -OB. the IS-LM model fails completely to predict the economy's short-run response to policy changes. OC. only the long-run behavior of the economy is accurately captured by the IS-LM model. OD. use of the IS-LM model for prediction purposes is basically a risky or uncertain estimate The predictive reliability of the IS-LM model appears to weaken over time because the assumption of a given price level becomes realistic less more

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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"Under a regime of full monetary accomodation, if the output gap rises, " O Equilbrium money increases and the interest rate goes up Equilbrium money decreases and the interest rate goes down O Equilbrium money increases and the interest rate goes down O Equilbrium money decreases and the interest rate goes down O Equilbrium money increases and the interest rate stays constant
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Assume the assumptions of the IS-LM model hold. Early last year, the onset of COVID-19 damaged the production ability of the economy and significantly decreased consumption. Which of the following, would be the most likely action of the central bank under this soenario? O a. The central bank decreases the money supply, which decreases the interest rate offsetting the effects on output from the decreased production and consumption O b. The central bank increases the money supply, which increases the interest rate, offsetting the effects on output from the decreased production and consumption Oc. The central bank increases the money supply, which decreases the interest rate. offsetting the effects on output from the decreased production and consumption Od. The central bank decreases the money supply, which increases the interest rate. offsetting the effects on output from the decreased production and consumption
D) what kind of monetary policy might be helpful to stabilize the economy ( expansionary or contractionary)? E) what specific monetary policy tools does the federal reserve have available to use in this scenario? F) explain in detal, how should the federal reserve use each ofthese tools to maximize their effect in stabilizing the economy, what will be the likely effect of each monetary tool's use on the money supply , and the resulting impact on the economy
In an OLG model with money: Each gen picks 12 banans when young, 0 bananas when old. Central bank prints out 2 units of money, given to gen 0 for free. Young generation= Cy Old generation= Co Cy= 4-vm Co= 0 +vm The population of this economy is ______ in each period.
Suppose you observe the time series of output y and real money supply M/ P reported in the Figure below. Nominal money supply M is under full control of the Central Bank. Output y Real Money Supply M$/P Time t Time t 0 1 2 4 1 2 3 6. Interpret these time series using the ASAD Redux model with workers misperceptions (Lecture Notes, Chapter 1). Assume that the time paths are caused by a single permanent shock hitting the economy at time t = 1, and interpret time t = 6 as the medium run. Your general task is to guess what type of shock can be responsible for the observed time series. Answer each of the following questions, providing clear motivation for your statements: (B) Can the shock be a permanent change, positive or negative, in nominal money supply Ms ? Motivate your answer.
If a central bank wants to make sure that its policy actions are successful in manipulating interest rates to stabilize an economy around its full-employment level, it should Multiple Choice O be prepared to make modest and frequent adjustments after receiving feedback on how its actions affect the economy never announce its intentions, because financial markets will always overreact frequently change its policies to keep financial markets guessing O react to a high rate of Inflation but not to an economic boom focus on Inflation and output gap equally
In economies with persistently high inflation, an increase in the money supply will: not affect the real quantity of money, making money neutral in the long run.. O positively affect aggregate real output in the long run. O negatively affect the real quantity of money, as the aggregate price level increases by more than the money supply. O positively affect the real quantity of money in the long run.
Suppose you observe the time series of output y and real money supply M/ P reported in the Figure below. Nominal money supply M is under full control of the Central Bank. Output y Real Money Supply M³/P Time t Time t 1 3 4 1 2 3 4 6. Interpret these time series using the ASAD Redux model with workers misperceptions (Lecture Notes, Chapter 1). Assume that the time paths are caused by a single permanent shock hitting the economy at time t= 1, and interpret time t = 6 as the medium run. Your general task is to guess what type of shock can be responsible for the observed time series. Answer each of the following questions, providing clear motivation for your statements: (a) Can the shock be a permanent change, positive or negative, in public expenditures G? Motivate your answer.
Please no written by hand solution tle shifts the Central Bank rule to the right. O a. An increase in the Z factors O b. A decrease in the price level O c. An increase in government spending O d. A decrease in government spending
Pls help with below homework.
As monetary policymakers become more concernedwith inflation stabilization, the slope of the aggregatedemand curve becomes flatter. How does the resulting change in the slope of the aggregate demand curvehelp stabilize inflation when the economy is hit with atemporary negative supply shock? How does this affectoutput? Use a graph of aggregate demand and supply todemonstrate.