to the central bank from banks a. I b. I and II c. I‚ II‚ and III d. I‚ II III‚ IV‚ and V ANSWER: B 2. The sum of currency and deposits to the central bank from commercial banks is called: a. The money supply. b. Domestic assets. c. The monetary base. d. Fractional reserves. ANSWER: C 3. Official intervention in the foreign exchange market to defend a fixed exchange rate when the value of domestic currency is under downward pressure: a. Causes international reserve holdings to rise.
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References: -Garret‚ D. Sloman‚ J. Wride‚ A. (2012)‚ Economics Eighth Edition‚ Chapter 20: Fiscal and Monetary Policy page 586‚ Pearson Education. -Garret‚ D. Sloman‚ J. Wride‚ A. (2012)‚ Economics Eighth Edition‚ Chapter 20: Fiscal and Monetary Policy page 630‚ Pearson Education. - HM Government (2010)‚ The Coalition: Our Programme for Government‚ 9. Deficit Reduction page 15‚ Crown copyright‚ http://www.direct.gov.uk/prod
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Economics Report Section 1: Analyse the recent trends in Australia’s major economic objectives. (Economic growth‚ inflation‚ unemployment‚ the exchange rate‚ environmental sustainability and distribution of income) Economic growth - Economic growth occurs when there is a sustained increase in a country’s productive capacity over time. This is generally measured by the percentage increase in real gross domestic problem. The target for economic growth set by the government is around 3-4%
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Fiscal & Monetary Policy Given the Current Macroeconomic Situation in the United States DeVry University Economics Instructor: Professor Bergan June 16‚ 2013 The macroeconomic situation in the United States can be determined by looking at what part of the business cycle the economy currently falls within. According to McConnell‚ Brue & Flynn (2012) “Business cycles are alternating rises and declines in the level of economic activity‚ sometime over several years” (p. 527). A typical business cycle
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Econ 214 Problem Set 5 1. What impact will an unanticipated increase in the money supply have on the real interest rate‚ real output‚ and employment in the short run? How will expansionary monetary policy affect these factors in the long run? Explain. The money supply in an economy is the benchmark by which interest rates are determined. The supply of money is directly tied into the amount of money that can be loaned and borrowed in various capacities. The more money there is to loan
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paper presents the effects of expansionary monetary policy to macro economic variables in the economy. The United States of America recorded a mortgage crisis since 2007. The financial sector issued out massive amounts of money to individuals to acquire homes. This was in line with government campaigns for equitable housing of US citizens in the United States. This led to an increase in loans offered to citizens to purchase homes‚ leading to an expansionary monetary policy. Though this strategy brought
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prevent; if do not‚ how do we make it go smoothly. Economic theory: Fiscal policy is the use of government taxation and expanding to influence variable of economy which including: * Aggregate demand and the level of economic activity * The pattern of resource allocation * The distribution of income Monetary policy is processed by which the national central bank of a country control the money supply‚ the policy often target the interest rate for the purpose of improving economic growth
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strict discipline‚ we can utilize fiscal or monetary policy tools in order to bring this nation back to an equilibrium state of mind. I will recommend in detail form how we can either use an expansionary fiscal policy or an expansionary monetary policy in order to achieve equilibrium. Either or‚ to bring this economy out of recession‚ an expansion of real GDP needs to occur to close this recessionary gap. First‚ we look at expansionary fiscal policy. The Federal government has at its discretion
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price stability. Monetary policy is the process by which the monetary authority of a country controls the supply of money‚ often targeting a rate of interest for the purpose of promoting economic growth and stability.[1][2] The official goals usually include relatively stable prices and low unemployment. Monetary theory provides insight into how to craft optimal monetary policy. It is referred to as either being expansionary or contractionary‚ where an expansionary policy increases the total supply
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the AD curve will9) Aggregate demand management policies are designed most directly to10) Suppose that consumer spending is expected to decrease in the near future. If output is at potential output‚ which of the following policies is most appropriate according to the AS/AD model11) According to Keynes‚ market economies12) The laissez-faire policy prescription to eliminate unemployment was to13) In the AS/AD model‚ an expansionary monetary policy has the greatest effect on the price level when it14)
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