An overly expansionary monetary policy leads, in general, to: a. High inflation O b. High stagflation O c. High deflation O d. High disinflation
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- When monetary authorities are deemed as "conservative," they are more likely to implement policies that OA. increase unemployment. B. decrease inflation. C. decrease unemployment. O D. strengthen the value of their currency.Monetary policy affects the economy with a lagmainly because it takes a long timea. for central banks to make policy changes.b. to change the money supply after a policydecision has been made.c. for a change in the money supply to affectinterest rates.d. for a change in interest rates to affect investmentspending.In the presence of shocks, monetary policy cannot be used to stabilize both the inflation rate and GDP. O a. Consumer confidence O b. Export ion O c. None of the answers is correct O d. Import
- Which of the following monetary policy action is intended to reduce inflation? Select one: a. Lowering of the discount rate b. None of the above Oc. Sale of government securities such as Treasury bonds O d. Lowering of reserve ratio O e. Reduce the interest rate on excess reservesIf the money supply increases by 50%, then in the long run, we can assume that _____ A. Both inflation and real GDP will increase B.The price level will increase by about 50% C. Velocity may adjust in response to the influx of cash D.Any of the above are possibleMoney demand is likely to increase the most during which part of the business cycle? A. recession B. trough Ос. рeak O D. contraction O E. recovery
- __ __ refers to the specific amount of money circulating in a country'seconomy at a particular period of time. * a. Cash supplyb. Monetary policyc. The time value of moneyd. Money supplyAs a manager of a firm, you are concerned about the rise of inflation rate from 3 to 5 percent(annualized) over the last four months despite the growth of the economy.a. Given the above situation should BNM adjust the monetary policy? Is so, explain theappropriate monetary policy BNM would use. Be sure to discuss how the monetarypolicy would be able to manage inflation while managing economic growth.15. When an SME’s functional currency is the currency of a hyperinflationary economy, a. all amounts in the financial statements shall be stated in terms of the measuring unit current at the end of the reporting period. b. some amounts in the financial statements shall be stated in terms of the measuring unit current at the end of the reporting period. c. all amounts for monetary assets and liabilities in the financial statements shall be restated using the general price index, rather than the specific price index. d. none of these. The PFRS for SMEs does not address this matter.
- Question 6 If the economy were represented by the following graph, what is the appropriate monetary policy? Price Level LRAS SRAS El P1 AD Real GDP Y1 Yp buy government bonds from commercial banks, thereby lowering interest rates and increasing aggregate demand. Ob sell government bonds to commercial banks, thereby lowering interest rates and increasing aggregate demand buy government bonds from commercial banks, thereby increasing interest rates and decreasing aggregate demand O d) sell government bonds to commerical banks, thereby increasing interest rates and decreasing aggregate demand.Question 4Suppose a country’s inflation level is higher than desired, and unemployment levels arelower than expected – the central bank decides that the economy is ‘overheated’ andattempts to use the appropriate monetary policy to deal with the situation. Describe,with the help of the appropriate figure, how a central bank might go about implementingsuch monetary policy, the subsequent effects this has on interest rates, the quantity ofmoney in the market, and the process through which this affects the level of expenditurein the economy.In the short run, expansionary monetary or fiscal policy is expected to O increase; decrease. inflation and output. increase; increase. decrease; decrease. O decrease; increase.