How does the federal government reduce interest rate? What happens to interest rate and quantity of money as a result of expansionary monetary policy? Please explain using a diagram of interest rates vs quantity of money. showing the relevant shifts in the supply and demand curve.

Explain what kind of fiscal policy and what kind of monetary policy are likely to reduce GDP.

The economy is in a recession with high unemployment and low output.A. Identify an open-market operation that would restore the economy to its natural rate.B. Use a money market graph to illustrate the effect of this open-market operation. Show the resulting change in the interest rate.C. Use a graph similar to the one in part (a) to show the effect of the open-market operation on output and the price level. Explain in words why the policy has the effect that you have shown in the gra

Considering how monetary policy affects the market, which of the following statements is most accurate? There is an indirect impact on aggregate demand by monetary policies. O There is more of an impact on consumption than investments by monetary policies. There is a direct impact on aggregate demand by monetary policies.

Which of the following scenarios below BEST matches an inflationary monetary policy aka a “loose money” policy?   a.Buying bonds increases the money supply, which lowers the interest rate b.Increasing taxes increases the reserve requirements, which decreases investment c.Increasing the discount rate lowers the real interest rate, which raises investment d.Selling bonds decreases the money supply which increases the interest rate e.Decreasing government spending lowers the interest rate, which lowers consumption

What is a monetary rule?  What is its purpose? Illustrate and explain the implementation of a monetary rule.

If Congress raises taxes and the Fed reduces money supply, then in the short run, the two policies would lead to:a. lower income but we don’t know if interest rate will rise or not.b. higher income but we don’t know if interest rate will rise or not.c. a lower interest rate but we don’t know if income will rise or not.d. a higher interest rate but we don’t know if income will rise or not

The answer choices for the blanks are Blank 1: fall, remain the same, rise Blank 2: remain the same, rise, decline Blank 3: international trade, real balance, interest-rate

What is the purpose of Monetary policy? Prove explanations in detail with an example

Start with a brief introduction that explains use of Government policy to control the economy. When is it appropriate to use monetary and fiscal policy to stimulate or stabilize the economy? Look at both. When is it inappropriate to use monetary and fiscal policy to stimulate or stabilize the economy? Look at both. What specific fiscal policy tools would you use to stimulate aggregate demand and how? What specific monetary policy tools would you use to stimulate aggregate demand and how? What is your conclusion, should policymakers use the monetary and or fiscal policy, or a combination of both, to stimulate aggregate demand? Explain your reasoning.