Should central banks use hawkish or dovish policies as economies recover from the current crisis? Why?...

Should central banks use hawkish or dovish policies as economies recover from the current crisis? Why? (Use data or economic model)

Expert Solution

Current crisis are responsible to have recession in economies. Due to recession, there is less , income , output and employment. Moreover, aggregate demand has also decreased.

In order to save the nation from current crisis dovish policy must be adopted by central bank. Dovish policy helps in controlling deflationary gap.

In dovish policy interest rates are reduced and money supply with commercial banks increased and people have more money due to fall in interest rate and aggregate demsnd , income output and employment opportunities increases..

Rahul Sunny answered 2 years ago

What kind of policies should central banks use to prevent crises?

The following questions deal with the structure of central banks. a. Should central banks be independent?...

The following questions deal with the structure of central banks. a. Should central banks be independent? Briefly list and discuss two (2) arguments, as discussed in class, to support your argument. b. What do we mean by the ‘dual mandate’ of the Federal Reserve Bank? Why does it matter? Explain using the concepts presented in the course. c. Why might deposit insurance mechanisms (like the FDIC) encourage banks to take on too much risk? Is deposit insurance, then, a bad...

3. Why do central banks use monetary policy? What kind of monetary policy do central banks...

3. Why do central banks use monetary policy? What kind of monetary policy do central banks take when an economy is in recession? Name any two tools/activities by central banks to exercise the policy. How do these tools/activities help? Why don’t they always do that?

5. Why do central banks and the Federal Reserve carry out contractive monetary policies in periods...

5. Why do central banks and the Federal Reserve carry out contractive monetary policies in periods of inflation? a. Briefly explain the quantity theory of money b. Explain why contractive monetary policies are carried out, using the quantity theory of money as the basis for your explanation. c. Explain what instruments a central bank or the Federal Reserve has to carry out contractive monetary policies, and what it has to do (raise or lower, buy or sell) in each case.

Which of the following services should recover full cost? Why? Which of these should use block-rate...

Which of the following services should recover full cost? Why? Which of these should use block-rate or peak-period pricing? Why? For which services is partial cost pricing justified? a. Public library b. On-demand genealogy research services offered by public library c. Public transportation (bus and rail) d. Public swimming pool e. Public water park with wave pool and slides f. Senior citizens center g. Space for senior citizens to exhibit and sell arts, crafts, and antiques h. Toll bridge i....

During the slow recovery from the global nancial crisis, central banks in many advanced countries kept...

During the slow recovery from the global nancial crisis, central banks in many advanced countries kept their interest rates at historically low levels, which we can interpret as lowering the global interest rate, r. Imagine you are the economic adviser for a small island nation open to international trade. a) How would the fall in the global real interest rate aect the level of Output based on the real money market (LM Curve)? What happens to the LM curve after...

What was the effect of the government policies implemented to recover from the recession?

Many of the central banks of the leading world economies have for years been actively working...

Many of the central banks of the leading world economies have for years been actively working for very low interest rates. What impact has this had on asset prices? Please explain. Use the CAPM to provide a frame of reference for your discussion

QUESTION ONE During the onset of the global financial crisis many of the world’s central banks...

QUESTION ONE During the onset of the global financial crisis many of the world’s central banks and governments prevented large banks to fail. If these institutions had allowed this occur there would have been large-scaled bank failure which would have had a negative impact on bank deposits. Using the Keynesian model illustrate and explain the impact of a large-scale bank failure on planned aggregate expenditure. QUESTION TWO An economy is initially in a recession. Using the aggregate demand and aggregate...

Summarize the monetary policy measures taken by central banks to address the worldwide financial crisis (2008)...

Summarize the monetary policy measures taken by central banks to address the worldwide financial crisis (2008) and the COVID crisis (2019/2020).

Question