Which of the following is NOT one of the factors in the FED "rule" used to determine if Monetary Policy action is required? other factors like world events that may impact the US economy price level and inflation the marginal propensity to consume (MPC) Oreal GDP and its effect on unemployment rates

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

Shift the curve on the graph to show the general impact of the central bank's new interest rate target on aggregate demand. PRICE LEVEL OUTPUT Aggregate Demand Aggregate Demand ?

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.

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

With a policy of nominal GDP targeting, if the Fed expected 6% growth in real GDP and wanted an inflation rate of 2%, it would set a target for nominal GDP growth of 8% per year. True False

In response to the Great Recession, the Federal Reserve had to take drastic and largely untested measures to stabilize both the financial system and macroeconomy. These measures caused the monetary base to increase from approximately $850 billion to over $4 trillion. Indicate whether each school of macroeconomic thought—classical, Keynesian, monetarist, real business cycle, and secular stagnationist—would support the Fed’s actions.

Given an inflationary gap, the Federal Reserve will use monetary policy to _________ real GDP and the interest rate. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease

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.

Draw a correctly labeled graph of the country’s reserve market, and show how the central bank’s action to move the economy toward its long-run equilibrium affects the policy rate in the short run