Question 41 Problem 1 d: Which of the following statements about the Monetary Policy Tools is correct? Open Market Operations are considered to be the most powerful monetary tool while the Discount Rate Rate is the most frequently used and most important tool. The Discount Rate is considered to be the most powerful monetary tool while the Required Reserve Ratio the most frequently used and most important tool. The Required Reserve Ratio is considered to be the most powerful monetary tool while the Discount Rate Rate is the most frequently used and most important tool.

Question 41 Problem 1 d: Which of the following statements about the Monetary Policy Tools is correct? Open Market Operations are considered to be the most powerful monetary tool while the Discount Rate Rate is the most frequently used and most important tool. The Discount Rate is considered to be the most powerful monetary tool while the Required Reserve Ratio the most frequently used and most important tool. The Required Reserve Ratio is considered to be the most powerful monetary tool while the Discount Rate Rate is the most frequently used and most important tool.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The Board of Governors of the Federal Reserve is in charge of setting and overseeing monetary policy and is headed by the ___________(PRESIDENT OF THE BANK OF NEW YORK / CHAIRMAN OF THE FEDERAL RESERVE / SPEAKER OF THE HOUSE / PRESIDENT OF FEDERAL OP[EN MARKET COMMITTEE). . Monetary policy is supposed to be____________(COORDINATED WITH/ INDEPENDENT OF) Congress and the president. This goal is hindered by the fact that the chairman is_______________(APPOINTED BY THE PRESIDENT / PUBLICLY ELECTED). Because Congress initially intended to create a decentralized banking system, there are also smaller branches of the Federal Reserve known as district banks. All presidents of the district banks take turns serving as members of the Federal Open Market Committee (FOMC) except for the president of the Federal Reserve Bank of __________(SAN FRANCISCO, NEW YORK, WASHINGTON DC), who is a permanent member. NOTE- This is one question but divided into the parts please answer with an…
Federal Reserve is the central bank of the United States. She conducts monetary policy with various tools.a. Many central banks share similar policy objectives. What are the objectives of the Federal Reserve? b. Suppose the Federal Reserve announces a “loose” monetary policy.What has to be done, traditionally, with an open market operation? Explain with reference to the money creation process
Monetary Policy is one the important drivers in growth & development of an economy. Illustrate at least four instruments/tools which are used universally in implementation of monetary policy.
EconomyRead the following premise carefully and answer the questions specifically and in detail. "Faced with instability in economic growth due to a recession or accelerated inflation, the Fed uses the open market operation to increase or decrease the available reserves of commercial banks which, in turn, will affect the amount of money available in the economy. economy In addition to open market operation, the Fed has other tools available to promote the growth, sustainment and economic stability of a country.These tools have been used historically; "A good example was the mortgage debt crisis of 2008." 1. Explain in detail monetary policy, its function and its effects on short- and long-term economic fluctuations. Use the aggregate demand and supply model presented in the course. 2. Explain each of the tools that exist in expansionary monetary policy and contractionary monetary policy.
The central bank of Barbados decides to pursue an expansionary monetary policy of reserve requirement ratio. ii) Carefully explain in as much detail as possible, how the chosen action will impact money market. iii) Illustrate with a diagram the overall impact of the chosen action on the money market.
Question 3: A individual wants to manage its demand for monetary assets. The options available include a bank deposit that pays 15% interest but requires 2 hours of dedicated time at bank during work hours to withdraw money. The total transaction need is $10,000 and the hourly wage rate if $7 for the individual. Find the optimal visits to the bank and average amount that is kept at bank. The economy is experiencing high inflation and the Governor State Bank makes the following observations. The Growth of Money Supply is 40%, the growth of income Y is 10% and growth in nominal interest rate is 20%. The interest rate elasticity is -0.1 and income elasticity is 0.5. What is the current inflation, and what should be the new value of money growth if Governor wants inflation to be 2%.
Question Two As an investment advisor, you have been requested to advise a client on whether he should invest his ten million dollars in Zambia or in South Africa. What key theory would you apply to advise the client on the short term and medium term implications of investing locally and abroad? The Government of Zambia has decided to pursue a dual mandate of price stability and economic growth in the conduct of monetary policy. Advise on the possibility of the country achieving both price stability and economic activity stability in the case of a temporary supply shock. Ensure to demonstrate this with the aid of the Aggregate Demand and Aggregate supply framework.
2) When would the Federal Reserve want to carry out a monetary policy to decrease aggregate demand?
10 Which are the examples of expansionary monetary policy or contractionary monetary policy. Sale of government socurities by the Bank of Canada Increasing overnight loans rate from 0 25% to 0.75%% Purchase of government securitles by the Bank of Canada Decreasing policy rate from 075% to 0 25
53) Which of the following statements about the ripple effects of monetary policy is FALSE? Monetary policy can Select one: a. raise the federal funds rate and shift the aggregate demand curve leftward. raise the federal funds rate, thereby raising the real interest rate and increasing potential GDP. c. raise the federal funds rate, thereby decreasing the quantity of money, raising the real interest rate, and decreasing investment.
6
10. According to the European Central Bank website, the treaty establishing the European Community "makes clear that ensuring price stability is the most important contribution that monetary policy can make to achieve a favourable economic environment and a high level of employment." If price stability is the only goal of monetary policy, explain how monetary policy would be conducted during recessions. Analyze both the case of a recession that is the result of a demand shock and the case of a recession that is the result of a supply shock.