Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and decrease the money supply when the price level rises. If the economy starts from long-run equilibrium and aggregate supply shifts left, the central bank must   a. decrease the money supply, which will move output back towards its long-run level.     b. decrease the money supply, which will move output farther from its long-run level.     c. increase the money supply, which will move output back towards its long-run level.     d. increase the money supply, which will move output farther from its long-run level.

Q: explain if the central bank pursues targeting the interest rate, it is likely to lossse control over…

A: In the figure below, once the money offer is command constant, will increase in cash demandresult in…

Q: The economy of Carlsberg is presently in equilibrium, but is suffering a recession as depicted in…

A: Aggregate expenditure describes the total amount of spending in the economy through consumption,…

Q: Assume an economy is experiencing a recession What are the three major tools a central bank can use…

A: Recession is a term used to describe the condition of an economy that is experiencing a decline in…

Q: TA 0 MSA A MA MD Ποσότητα Χρήματος

A: The organized market where one can lend or borrow money for the short term is said to be a money…

Q: The economy has entered a period of recession and the Central Bank has decided to increase the money…

A: Monetary policy is the use of certain tools by the central bank of the country in order to influence…

Q: When fighting a recessionary gap, central banks will amount of loans being provided by commercial…

A: A recessionary gap, is also known as contractionary gap. It happens when a country's real GDP is…

Q: In the country of Sparta, money supply equals 13 million drams, real GDP is 65 million drams, the…

A: Nominal GDP is calculated by taking the multiplication of real GDP and the price level. Thus,…

Q: The Federal Reserve expands the money supply by 5%. On paper, draw an aggregate Supply/aggregate…

A: It describes the entire amount of money in an economy at a specific moment in time. Changes in money…

Q: What is an implication of the neutrality of money in the long run?     The economy's level of…

A: The neutrality of money theory is predicated on the concept that money may be a “neutral” factor…

Q: After the Federal Reserve buys bonds, the interest rate changes and aggregate expenditures change,…

A: Answer: If the federal reserve buys bonds then it will pay the price of bonds to the bondholders. It…

Q: If the money multiplier is determined to have a value of 5 and the Fed wants to increase the money…

A: The total value of money available in an economy at a point in time that is supplied by the central…

Q: When the economy makes the transition from its short-run equilibrium to its long-run equilibrium,…

A: Macroeconomic equilibrium refers to a condition in the economy where the amount of goods and…

Q: Real GDP and the velocity of circulation are constant.   What is the change in the price level in…

A: Quantity theory of money shows the relationship between the Money supply , velocity , real GDP and…

Q: On the following graph, shift the curve or drag the blue point along the curve, or do both, to show…

A: Phillips curve shows relationship between the rate of unemployment and the rate of inflation That…

Q: bugh the short-run effects of this move according to the Keynesian transmission mechanism. e…

A: A monetary policy that brings down interest rate and invigorates getting is known as an expansionary…

Q: Suppose our federal government finally decided to reduce the debt by increasing taxes. Fearful that…

A: The rise in the taxes is a part of fiscal policy. The rise in tax will cause fall in aggregate…

Q: A decrease in government spending or an increase in taxes will: a) shift the money supply curve to…

A: One can determine the change in government spending or taxes by the shifts in IS curve. The changes…

Q: Assume the United States economy is operating at a recession.  a. Using a correctly labeled…

A: The aggregate demand refers to the total demand for all goods and services produced in an economy in…

Q: Suppose banks are currently holding some excess reserves, but they become more confident in the…

A: The money supply refers to the proportional to the monetary base and is given by M = m × MB, where M…

Q: What happens to the aggregate demand curve when the Fed reduces the money supply? a. It shifts…

A: When the Fed reduces the money supply, then it leads to higher interest rates.

Q: Consider an economy that is initially in its​ long-run equilibrium. Suppose this economy suffers a…

A: Inflation refers to the sustained increase in the general price level of goods and services in an…

Q: The following graph shows the aggregate demand (AD) and short-run aggregate supply (SRAS) curves.…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: What must the gum economy’s Fed do to meet its long-run instruction in relation to production…

A: Product expansion: Real GDP (GDP) rises for two or more consecutive quarters during the expansion…

Q: What is the effect of a rise in the U.S. price level on the buying power of money?   The buying…

A: Nominal income is the income in monetary terms like $100. But the real income is the amount of goods…

Q: The economy of Carlsberg is presently in equilibrium, but is suffering a recession as depicted in…

A: Macroeconomic research provides a comprehensive forecast for the fiscal landscapes of entire…

Q: urgent!! This country is witnessing a recession. The Chief economist in the government of this…

A:

Q: When the Fed controls the rate of growth of the money supply to foster macroeconomic stability, this…

A: The United States of America's central bank is referred to as FED or the Federal Reserve System. The…

Q: If the central bank increases the supply of money, a new equilibrium is reached by A rightward shift…

A: Money Supply: - In an economy, the total value of money in circulation at a point in time is known…

Q: What can be a reason why inflation is not occuring when government spending increases in an economy?

A: inflation refers to the sustained rise in the general price level. It is the general rise in the…

Q: What happens to the amount of money demanded or supplied in each of the following cases? Draw a…

A: Money can either be saved, spent or invested. "Money supply refers to the total amount of money…

Q: An increase in government purchases will shift the IS curve up. shift the LM curve down. shift the…

A: An increase in government purchases will shift the IS curve up. Reason: As the government spending…

Q: oney supply grows at a rate of / > 0 initially. At some later time, an immediate decrease in the…

A: *Answer:  The money supply is the supply of currency in an economy. It means the central bank uses…

Q: When the Federal Reserve buys government securities from a bank, the money supply ________ and…

A: Purchasing bonds or securities from banks by the federal reserve would increase the money supply in…

Q: The Quantity Theory of Money (QTM) states that ______. Note: the blank represents an entire phrase,…

A: Quantity Theory of Money is an economic theory stating the relationship between Money supply,…

Q: Suppose inflation is still high be mid-2022 and the Fed chair announces his/her policy. Suppose his…

A: There is a trade-off between inflation and unemployment. Every central bank requires to strike a…

Q: Suppose the Federal Reserve (the US central bank) increases the money stock. Which of the following…

A: The increase in the money supply is mirrored by an equal increase in nominal output, or Gross…