The​ Fed’s bond holdings increased from​ $900 billion in 2009 to​ $4.5 Trillion in 2016. The purpose of the​ Fed’s decision to increase its bond holdings from 2009 to 2016 was to     A. to decrease the reserves in the banking system thus engaging in so called​ “contractionary monetary​ policy” needed to contract the level of inflation   B. contract the money supply to counteract the high rates of unemployment then existing in the United States   C. increase the reserves in the banking system to increase bank lending and aggregate demand.   D. engage in expansionary fiscal policy

"Considering the Taylor Rule for monetary policy, which action would a central bank most likely take if the actual inflation rate is below the target inflation rate and the real GDP is above the potential GDP? A) Increase the interest rate to reduce inflation. B) Decrease the interest rate to stimulate inflation. C) Keep the interest rate unchanged, as the effects on inflation and GDP are offsetting. D) Increase the money supply to reduce the real GDP to its potential level.

The central bank of a country facing economic and financial market difficulties asks for your advice. The bank cut its policy interest rate to the effective lower bound, but it wasn't enough to stabilize the economy. Drawing on the actions taken by the Federal Reserve during the financial crisis of 2007-2009, what might you advise this central bank to do? Multiple Choice O You should advise the central bank to use unconventional monetary policy tools such as quantitative easing, a policy in which the central bank alters the composition of its balance sheet, or credit easing, where aggregate reserves are provided beyond the level needed to lower the policy rate to zero. The central bank could also inform markets of its commitment to keep Interest rates low (forward guidance). Because the central bank has hit the zero bound with its policy Interest rate, there is nothing further it can do to Influence economic and financial market conditions. In the face of severe economic weakness, you…

Assume the economy is suffering from massive inflation and you are the Chairperson of the FED. What type of monetary policy would you employ and describe what changes are made to the “three tools” of monetary policy. Describe the subsequent impact on the money supply, interest rates, aggregate spending, and real GDP.

Suppose that initially the money supply is $2.0 trillion, the price level equals 2.00, the real GDP is $4.0 trillion in base-year dollars and income velocity of money is 4. Then suppose that the Fed cuts the money supply in half but the income velocity of money doubles. Calculate the price level after all these changes have taken place.

The task I am struggling with. Thank you very much for your help and have a nice day.

When faced with mild stagflation due to a leftward shift in the short-run AS curve, central bankers usually:   Select one:   a.   sell government bonds on the open market   b.   do nothing and wait for the economy to self-correct (unless inflation is high or accelerating)   c.   offset the inflationary effect by expansionary monetary policy shifting AD to the right   d.   raise the interest rate target to offset the economic contraction

At the start of the 2008/2009 financial crisis, the Fed_____ in an attempt to pump reserves into the banking system.  A)bailed out Lehman Brothers  B)froze all desired reserves  C)purchased failing banks D) double the monetary base