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

Which of the following supports the argument for hands-off policy? A. Monetary policy does not impact the economy. B. Fiscal policy does not impact the economy. C. Fine-tuning is not compatible with our design capabilities. D. The economy has been fairly stable since World War II.

A policy that results in slow and steady growth of the money supply is an example of   A-an “easy” monetary policy. B-a “passive” monetary policy. C-a “practical” monetary policy. D-an “active” monetary policy.

Fiscal and Monetary Policies are different in that a)Only fiscal policy tools  may include taxation and stimulus checks for a country residents b)Only monetary policy tools may include targeting the Fed Funds rate c)Only Congress is authorized to approve spending associated with fiscal policy d)All of the above

If the U.S. government's budget deficits are increasing aggregate demand, and the economy is producing at a level that is substantially less than potential GDP, then: a) government borrowing is likely to crowd out private investment. b) an inflationary increase in the price level is in real danger. c) the central bank might react with an expansionary monetary policy. d) higher interest rates will crowd out private investment.

Should Monetary and Fiscal Policymakers Try to Stabilize the Economy? Explain.

Using the aggregate demand and supply model shows how a government can manage aggregate demand. Faced with the possibility of recession explain how monetary policy may be used to rectify the position. How effective is such a policy likely to be?

Boblandia produces no oil. It starts at potential GDP with inflation equal to the Central Bank's inflation target. Boblandia then sees a significant increase in the price of oil. Which of the following is true (according to our models) if the Central Bank engages in inflation targeting? The Central Bank will enact expansionary monetary policy. This action will put upward pressure on read GDP. The Central Bank will enact expansionary monetary policy. This action will put downward pressure on read GDP. The Central Bank will enact contractionary monetary policy. This action will put upward pressure on read GDP. The Central Bank will enact contractionary monetary policy. This action will put downward pressure on read GDP.

2) When would the Federal Reserve want to carry out a monetary policy to decrease aggregate demand?

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