MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Chapter 13, Problem 6TY
To determine
To describe: The assumptions which may make the weaken the effects of the
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Using the book of Godley, Wynne, and Marc Lavoie. 2012. Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth. 2nd ed. 2012 edition., Simulate a scenario of the deterministic version of the model where the interest rate increases by one percentage point. What is the effect of the increase in the interest rate? Discuss using the below plots.
a) Identify the four major tools of monetary policy. b) How can monetary policy address the problem of inflation?
There was a temporary increase in the price of oil. Why does an increase in price of oil pose a dilemma for the monetary authority (Fed)?
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- What are the goals of monetary policy? Which goal is the most important or the principal goal?arrow_forwardWhich of the following individuals is NOT associated with the school of Modern Monetary Theory? Group of answer choices Bernie Sanders, U.S. Senator from Vermont, Presidential Candidate Bill Mitchell, Australian professor of economics and theorist Randall Wray. The Levy Institute at Bard College Lawrence Summers, former Treasury Secretary and President of Harvard US Representative Alexandria Ocasio-Cortezarrow_forwardWhat would be the consequences of eliminating monetary policy?arrow_forward
- The United States Federal Reserve has two mandates when setting monetary policy - keep annual inflation low (around 2-3%) and the unemployment rate low (around 5%). Typically, efforts to adjust the money supply to cause inflation to decrease causes unemployment to increase and vice versa. Now, imagine a situation where the United States faces high inflation and high unemployment (called stagflation, was issue in late 1970s). What do you think the Federal Reserve should do in this situation?arrow_forwardWhat is monetary policy, and who is responsible for creating it?arrow_forwardWhy is it important to be aware of the different monetary theories?arrow_forward
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