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2. The U.S. Federal Reserve is the central bank of the United States. It has many roles in the economy, but one of the key roles is conducting monetary policy.
a. What is monetary policy?
Monetary policy is one of the tools that a national government uses to influence its economy. In the USA, monetary policy comprises the Federal Reserve's actions and communications to promote...
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Explain in details three (3) tools that a government can utilize while deploying expansionary/contractionary Monetary Policy.
1) Open Market OperationsThis is seen clear when central banks buy or sell securities. They are either bought from or sold to the country's private banks. When the central bank buys securities, it adds...
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Q. which policy you will use Easy-Monetary policy or Tight-Monetary policy
If The CPI and GDP deflator have risen 3 percent in the last six months.
Explain in some sentences
CPI and GDP deflator are the commonly used price indices in measuring inflation. The rise in CPI and GDP deflator by 3% in the past six months is an indication...
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An increase in the budget deficit is the result of: (2)
(a) Expansionary monetary policy;
(b) Contractionary monetary policy;
(c) Expansionary fiscal policy;
(d) Contractionary fiscal policy.
(c) Expansionary fiscal policy
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Suppose the central bank conducts a contractionary monetary policy by reducing her growth rate of the money supply. How does a tightening of monetary policy influence nominal interest rates?
Tight monetary policy reduces the quantity of money and credit below what it otherwise would have been and raises nominal interest rates.
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with the aid of the Phillip's curve explain what happens to unemployment in the shorts run and in the long -run if central bank unexpectedly pursues contractionary monetary policy
Contractionary Monetary Policy The central bank, at some point, needs to control the interest rates and supply of money in an economy. They achieve this by using a tool called monetary...
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Q.1.3 An increase in the budget deficit is the result of: (2) (1) Expansionary monetary policy; (2) Contractionary monetary policy; (3) Expansionary fiscal policy; (4) Contractionary fiscal policy.
(1) Expansionary fiscal policy
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Explain when the FED would use a contractionary monetary policy and an expansionary monetary policy, and what the overall result would/could be.
Contractionary monetary policy is when the economic growth lowers down to prevent inflation. The pursue of FED is to control inflation of the economy rate of 2%.However the FED wants...
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Explain when the President and Congress would use a contractionary fiscal policy and an expansionary fiscal policy what the overall result could/would be.
If the President and Congress would use a contractionary fiscal policy and an expansionary fiscal policy, then it couldn't be effective, because these policies are opposite to each other and...
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<ol><li>Mention any 5 concepts used interchangeably with lending rate, strict monetary policy and accommodative monetary policy</li></ol>
These are the reserve requirement, open market operations, the discount rate, and interest on excess reserves. These tools can either help expand or contract economic growth. The Federal Reserve created...
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