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)
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...
a.
a. What does a contractionary monetary policy involves?
b. Who is responsible to implement monetary policies in the
US?
c. When would the central bank of a country implement this type
of policy? Explain.
d. Using a graph explain the impact of this contractionary
policy on the economy specifically - real GDP, unemployment and
rate of inflation.
You can draw the graph on a paper, label it as
MONETARYPOLICY
-Monetary Policy
What is monetary policy? Who conducts monetary policy in the
United States? Read the most recent FOMC statement. Did the FOMC
increase or decrease interest rates? Explain why the FOMC changed
the interest rate and how a change in the interest rate impact the
economy as a whole.
-Fiscal Policy
What is fiscal policy? Is the President and Congress currently
running expansionary fiscal policy or contractionary fiscal policy?
Why?
What is fiscal and monetary policy? Who implements these
policies? Suppose a country has high inflation. What kind of fiscal
and monetary policy do you suggest? Explain why.
Describe the differences between fiscal policy and monetary
policy. What fiscal and monetary policies might be prescribed for
an economy in a deep recession? Be sure to distinguish between the
monetary and fiscal policy solutions in your answer.
Two policies that can correct the situation are- Fiscal policy and
Monetary Policy.
(Fill
the following table showing
at-leasttwo
difference between the two.
You can tell more than two differences also.)
Difference
Fiscal Policy
Monetary Policy
1
2
Fiscal Policy:
There are
two types of Fiscal policies: Expansionary
fiscal policy and
contractionary
fiscal 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) Expenditure multiplier...