Explain Monetary and Fiscal Policies. a) How does contractionary monetary policy works? Explain by graphs (...

Explain Monetary and Fiscal Policies.

a) How does contractionary monetary policy works? Explain by graphs ( interest rate, exchange rate, consumption, import, export)

b) How does expansionary fiscal policy works? Explain by graphs. ( interest rate, exchange rate, consumption, import, export)

Expert Solution

Rahul Sunny answered 8 months ago

explain the expansionary and contractionary monetary policy graphs as to how an increase in the cash...

explain the expansionary and contractionary monetary policy graphs as to how an increase in the cash rate from 1 % to 1.5% would help to keep inflation within the target rate, and how a further decrease from 1% to 0.75 % in the cash rate would help to stimulate the economy. Describe the circumstances in which the RBA Board might decrease and/or increase the cash rate in the future

1. With the aid of graphs explain the effect of contractionary monetary policy on the level...

1. With the aid of graphs explain the effect of contractionary monetary policy on the level of output, prices, and interest rates for (i) the Keynesian AS-curve case, (ii) the classical AS-curve case, and (iii) the intermediate case. 2. Use the AD/AS graphical framework to show the effect of expansionary fiscal policy on the level of output, prices and the interest rate in the short run and the long run

Monetary Policy: There are two types of Monetary policies: Expansionary monetary policy and contractionary monetary policy....

Monetary Policy: There are two types of Monetary policies: Expansionary monetary policy and contractionary monetary policy. Key-Questions: 1. Explain each of the key terms in not more than one or two sentences (give formula or examples whichever is applicable): (a) Overnight rate of interest (b) Bank rate (c) Money multiplier (d) open market operations. 2. Discuss about the impact of each policy on the supply of money and inflation with suitable explanation and example. 3. Give a graphical explanation of...

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Explain Monetary and Fiscal Policies. a) How does contractionary monetary policy works? Explain by graphs (...

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