suppose the economy suffers an adverse supply shock. if the federal reserve responds by increasing the money supply, the short run results will be

Suppose the Federal Reserve (the US central bank) increases the money stock. Create a graph that explains the effect of the Fed's expansionary monetary policy in the Long Run.

How might each of the following factors complicate the implementation of monetary policy: long and variable lags, excess reserves and movements in velocity ?

The primary instrument of monetary policy for the Fed is the discount rate.     True   False

The former chairman of the Federal​ Reserve, Alan​ Greenspan, used the term​ "irrational exuberance" in 1996 to describe the high levels of optimism among stock market investors at the time. Stock market indexes such as the​ S&P Composite Price Index were at an​ all-time high. Some commentators believed that the Fed should intervene to slow the expansion of the economy.   Why would central banks want to clamp down when the economy is​ growing?

Both increases in the price level and increases in real GDP will decrease the demand for money True False

Explain how lowering the reserve requirement ratio by the central bank will affect the aggregate demand at any given price level. Use relevant graphs to support your answer.

If the money demand function is unstable and undergoes substantial, unpredictable changes, then the level of interest rates set by the central banks will provide more information about the stance of monetary policy than will the money supply. Is this statement true, false, or uncertain? Explain your answer

Between 1950 and 1975, the average annual rate of change in the money supply was slightly less than 4 percent. Has the Fed expanded the money supply more (or less) rapidly than this 4 percent long-term rate during the past 12 months? The past 24 months? Is the Fed's current monetary policy restrictive or expansionary? Explain.

Suppose the Federal Reserve (the US central bank) increases the money stock. Create a graph that explains the effect of the Fed's expansionary monetary policy in the Short Run.