Student often struggle to understand why monetary policy sometimes has an effect on output and other...

Student often struggle to understand why monetary policy sometimes has an effect on output and other times does not. Students tend to think either the monetary policy SHOULD or SHOULD NOT have an effect.

Consider the following statements and relate them to the ideas of why the impact of monetary policy differs when it is anticipated vs unanticipated, and why it differs in the short run and the long run.

Bob: "Boy, I just didn't know what to expect on Dr. Smith's first exam, and I really studied wrong for it. I'll adjust my studying techniques from now on."

Jim: "I had Dr. Smith last semester and knew what to expect, so I was prepared."

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Rahul Sunny answered 2 years ago

Student often struggle to understand why monetary policy sometimes has an effect on output and other...

Student often struggle to understand why monetary policy sometimes has an effect on output and other times does not. Students tend to think either the monetary policy SHOULD or SHOULD NOT have an effect. Consider the following statements and relate them to the ideas of why the impact of monetary policy differs when it is anticipated vs unanticipated, and why it differs in the short run and the long run. Bob: "Boy, I just didn't know what to expect on...

Illustrate and explain what will be effect of an expansionary monetary policy on output and price...

Illustrate and explain what will be effect of an expansionary monetary policy on output and price in short run and long run, under fixed vs floating ecchange rate regime and perfect capital mobility? Use IS-LM and AD-SRAS-LRAS diagrams to answer this question.

Suppose that expansionary monetary policy had no effect whatsoever on employment or output in either the...

Suppose that expansionary monetary policy had no effect whatsoever on employment or output in either the short or long run; that is, suppose that monetary policy only affected the price level. And, suppose further that everyone understood this to be true. Would the central bank be more or less vulnerable to the time-inconsistency trap in this case? Please defend your reasoning.

d) Explain the effect of an expansionary monetary policy on real physical output, employment and inflation...

d) Explain the effect of an expansionary monetary policy on real physical output, employment and inflation given that economy in Zambia is operating at potential output level. [6 Marks] e) Use the aggregate demand and the 45-degree line to represent equilibrium in the goods market. Make sure to include intercept, and slope in your graph. Further assume that interest rates decrease, show the effect of decreased interest rates on equilibrium income. Explain the stage economy goes through in moving from...

Q2. Fiscal policy, like Monetary policy, cannot change the natural level of output. Why then is...

Q2. Fiscal policy, like Monetary policy, cannot change the natural level of output. Why then is MP considered neutral but FP is not?

Monetary policy and fiscal policy often change at the same time.

Monetary policy and fiscal policy often change at the same time. (a) Suppose the government wants to raise investment but keep output constant. In the IS-LM model, what mix of monetary and fiscal policy will achieve this goal? In other words, what needs to happen to M and G or T? Sketch the IS-LM model and illustrate your answer graphically. (b) In the early 1980s, the U.S. government cut taxes and ran a budget deficit while the Fed pursued a tight monetary...

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Student often struggle to understand why monetary policy sometimes has an effect on output and other...

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Student often struggle to understand why monetary policy sometimes has an effect on output and other...

Illustrate and explain what will be effect of an expansionary monetary policy on output and price...

Suppose that expansionary monetary policy had no effect whatsoever on employment or output in either the...

d) Explain the effect of an expansionary monetary policy on real physical output, employment and inflation...

Q2. Fiscal policy, like Monetary policy, cannot change the natural level of output. Why then is...

Monetary policy and fiscal policy often change at the same time.

Because money is neutral, monetary policy has no influence on output and should not be used....

Discuss the effect of monetary policy on investment spending.

A. Why does monetary policy have a greater effect on aggregate demand in an open economy...

13. “A perfect-foresight model predicts that expansionary monetary policy has no effect on the level of...