ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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The range within which the federal funds rate can fluctuate is determined by a ceiling of the ______ and a floor of the ______.
discount rate...IOER
IOER....discount rate
target federal funds rate...ioer
ioer....target federal funds rate
disount rate....target deferal funds rate
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- What phenomenon suggests that increasing government borrowing may Increase Investment and hence demand? liquidity trap crowding In fiscal expansion crowding outarrow_forwardWhen the demand for money as a medium of exchange is high, the impact of fiscal policy on aggregate product is magnified by the crowding out effect. Select one: O True O False Checkarrow_forward8) Consider the economy of Hicksonia. a. The consumption function is given by C=200+ 0.75(Y-T) The investment function is I = 200-25i Government purchases and taxes are both 100. For this economy, graph the IS curve for i ranging from 0 to 8. Is the Government running a surplus or a deficit (or neither)? b. The money demand function in Hicksonia is M d = Y - 100 i The money supply M is 1,000 and the price level P is 2. For this economy, graph the LM curve for i ranging from 0 to 8. c. Find the equilibrium interest rate i and the equilibrium level of income Y. d. Suppose that the government purchases are raised from 100 to 150. How much does the IS curve shift? What are the new equilibrium interest rate and level of income? e. Suppose instead that the money supply is raised from 1,000 to 1,200. How much does the LM curve shift? What are the new equilibrium interest rate and level of income? f. With the initial values for monetary and fiscal policy, suppose that the price level rises…arrow_forward
- Please answer number #11arrow_forwardWhich of the following is the best approach for the Federal Reserve to eliminate the gap shown in the graph below? Price Level LRAS SRAS AD Real GDP The Fed should buy bonds in the open market and raise the discount rate. The Fed should buy bonds in the open market and lower the discount rate. The Fed should sell bonds in the open market and raise the discount rate. The Fed should sell bonds in the open market and lower the discount rate.arrow_forwardWhich of these statements are true? The discount rate is normally equal to the federal funds rate. The federal funds ratre is normall higher than the discount rate. The Federal Funds rate is the rate that banks are charged when they borrow from the Fed. O The discount rate is normally higher than the federal funds rate.arrow_forward
- 4 Which of the following policies did the Fed follow after 2014? O To unwind expansionary policy measures and try to return to a normal stance of policy. O To get the economy out of a recession. O To stimulate the U.S. financial and banking systems. O To lower interest rate in an attempt to stimulate economic growth. O None of these. 5 The recent use of discretionary fiscal policy was facilitated by O the elimination of the balanced budget amendment. O the ineffectiveness of monetary policy. O changing beliefs among economists about the lags of monetary policy. O the use of automatic policy rules. O the prediction of high rates of unemployment that could otherwise occur in the future if government did nothing. 6 For real and potential GDP to be equal, the budget surplus has to be zero. O True O Falsearrow_forward4.This is a two-part assignment using the links below plus additional resources. Using the below links interpret the monetary and fiscal policies as either expansionary or contractionary. Define which school of thought supports each of the polices. Make sure to cite at least three sources either in MLA or APA style and have a minimum of 250 words. Here are some sources to get started https://www.whitehouse.gov/issues/budget-spending/ (Links to an external site.) https://www.federalreserve.gov/monetarypolicy/fomccalendars.htmarrow_forwardIf there is a temporary demand shock (the demand decreases) and the Fed or the government decides to “do nothing” and to wait for the economy to “fix itself,” which curve(s) will automatically shift on the graph to represent this adjustment?Group of answer choices 1There is a curve that is vertical but it is neither the supply curve nor the demand curve. 2The demand curve. 3The supply curve. 4No curve is vertical in the currency exchange market graph.arrow_forward
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