how the Central Bank could provide a major stimulus to an economy which had been experiencing...

how the Central Bank could provide a major stimulus to an economy which had been experiencing a prolonged period of poor growth and very low levels of inflation and interest rates？

Expert Solution

Rahul Sunny answered 2 years ago

If the government and central bank had not intervened in the economy in the wake of...

If the government and central bank had not intervened in the economy in the wake of the recent financial crisis, the: a. drop in consumption and investment would have reduced aggregate demand causing deflation b. drop in consumption and investment would have reduced aggregate demand causing inflation c. increase in consumption and investment would have increased aggregate supply causing disinflation d. increase in consumption and investment would have increased aggregate demand causing inflation

7. Consider an economy experiencing a decline in business confidence. Assume that the central bank uses...

7. Consider an economy experiencing a decline in business confidence. Assume that the central bank uses the real interest rate as its policy instrument and its ultimate objective is to keep output at the full-employment level. A. Use the IS-LM model to explain and illustrate the impact of this shock on the equilibrium output level. B. What is the appropriate Central Bank response to this shock? Illustrate and explain how the central bank uses open market operations under these circumstances....

1- Which combination of policies are likely to provide Keynesian stimulus to an economy in a...

1- Which combination of policies are likely to provide Keynesian stimulus to an economy in a depression? Tax cuts on investment and increases in defense spending. An increase in the income tax rate and an increase in transfers going to unemployed workers. An increase in the income tax rate and cuts in defense spending. An increase in salaries paid to members of Congress and a cut in the money supply. 2- How would you describe the state of the U.S....

Explain how the Central Bank can increase the interest rate in the economy.

how the short term interset rate affect the central bank and the economy?

Makandingi, a prosperous agrarian economy, had been in existence since 1360. The economy could boast of...

Makandingi, a prosperous agrarian economy, had been in existence since 1360. The economy could boast of brave warriors and industrious citizens. The people of Makadingi were mainly farmers. The economy was well noted for livestock rearing and production of vegetables, plantain and oil palm. The Makandingian economy was full of praise for its trading activities. The individuals and groups of people exchanged commodities among themselves and with other neighbouring economies without financial transactions. The exchange of commodities operated on the...

Suppose you are the governor of the Bank of Canada and the economy is experiencing a...

Suppose you are the governor of the Bank of Canada and the economy is experiencing a sharp rise in the inflation rate. What actions would you take in: a. open-market operations sell bonds buy bonds make advances to the chartered banks change the overnight lending rate b. the bank rate raise the rate lower the rate set the rate at the lower bound of the Bank of Canada's operating band for the overnight lending rate set the rate lower than...

Suppose in an economy which is producing at its potential output, the central bank decides to...

Suppose in an economy which is producing at its potential output, the central bank decides to implement an expansionary monetary policy. Using the AD-AS model, explain the effect that this policy will have in the short run, and in the long run. Illustrate your answer with a diagram.

could you expand on what an economy central interest is and how depressing it will effect...

could you expand on what an economy central interest is and how depressing it will effect the economy.

Suppose you are the governor of the Bank of Canada. The economy is experiencing a sharp...

Suppose you are the governor of the Bank of Canada. The economy is experiencing a sharp rise in the inflation rate. What changes would you consider in: a) Open-market operations b) The bank rate c) Explain in each case how the change you advocate would affect chartered bank cash reserves and influence the money supply? Elaborate your ideas with hypothetical examples related to any Canadian charted bank? d) Distinguish between the overnight lending rate and the prime interest rate....

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