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 thes scenano? Oa The central bank decreases the money supply, which decreases the interest rate offsetting the effects on output from the decreased production and consumption Ob The central bank increases the money supply, which increases the interest rate. offsetting the effects on output from the decreased production and consumption O. 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

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 thes scenano? Oa The central bank decreases the money supply, which decreases the interest rate offsetting the effects on output from the decreased production and consumption Ob The central bank increases the money supply, which increases the interest rate. offsetting the effects on output from the decreased production and consumption O. 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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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
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You are employed at an Economics consulting firm called Eco Xcel. You have been approached bya client who read the article below entitled, “Another big hike raises South African interest ratesnear pre-Covid levels” and who has very limited understanding of monetary policy and how itworks. He has asked you to write a report that provides some clarity on Monetary Policy in thecontext of the South African economy. Another big hike raises South African interest rates near preCOVID levels. JOHANNESBURG (Reuters) -South Africa’s central bank delivered another big interest rate hike onThursday, taking its main lending rate back near pre-COVID levels as it battles to bring inflationback to target.The South African Reserve Bank (SARB) raised its repurchase rate by 75 basis points (bps) to6.25%, in line with the forecast of the majority of economists polled by Reuters. The rand pared gains against the U.S. dollar after the decision was announced, as some tradershad positioned for a larger…
Discuss in detail the limitations of the IS-LM Model. Why is it unrealistic for today’seconomies?
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