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Question
Analysis of the transmission mechanisms of monetary policy provides four basic lessons for a central bank's conduct of monetary policy. These lessons include:
A) Rising interest rates indicate a tightening of monetary policy, whereas falling interest rates indicate an easing of monetary policy.
B) Monetary policy can be highly effective in reviving a weak economy even if short-term interest rates are already near zero.
C) Avoiding fluctuations in the level of unemployment is an important objective of monetary policy, thus providing a rationale for interest-rate stability as the primary long-run goal for monetary policy.
D) Other asset prices beside those on short-term debt instruments do not contain important information about the stance of monetary policy because they are not important elements in various monetary policy transmission mechanisms.
Answer
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Related questions
Q:
If aggregated demand is less than actual output, unplanned inventory ________ will cause output to ________.
A) accumulation; rise
B) depletion; fall
C) depletion; rise
D) accumulation; fall
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A) cut; keep from accumulating
B) expand; keep from accumulating
C) cut; build up
D) expand; build up
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In the Keynesian framework, as long as output is above the equilibrium level, unplanned inventory investment will remain ________ and firms will continue to ________ production.
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B) negative; raise
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D) positive; raise
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In the Keynesian framework, as long as output is ________ the equilibrium level, unplanned inventory investment will remain ________ and firms will continue to raise production.
A) below; negative
B) above; negative
C) below; positive
D) above; positive
Q:
Keynes mentioned two factors that influenced planned investment spending:
A) interest rates and disposable income.
B) interest rates and business expectations about the future.
C) disposable income and business expectations about the future.
D) interest rates and business expectations about inflation.
Q:
Everything else held constant, if total consumption increases from $600 to $800 because of an increase of disposable income of $400, then the mpc is equal to
A) 0.2.
B) 0.4.
C) 0.5.
D) 0.6.
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Assume that disposable income equals $1000 and the mpc equals 0.6. If total consumption equal $800, then autonomous consumption is equal to
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In the Keynesian model of income determination, consumer expenditure includes spending by
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Q:
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Which of the following does not shift the IS curve?
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An autonomous depreciation of the U.S. dollar makes American goods ________ relative to foreign goods and results in a ________ in U.S. net exports, everything else held constant.
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B) cheaper; rise
C) more expensive; decline
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An increase in government spending causes the equilibrium level of aggregate output to ________ at any given interest rate and shifts the ________ curve to the ________, everything else held constant.
A) rise; LM; right
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C) fall; IS; left
D) fall; LM; left
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In the Keynesian cross diagram, a decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift ________, the equilibrium level of aggregate output to fall, and the IS curve to shift to the ________, everything else held constant.
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A rise in autonomous planned investment spending causes the equilibrium level of aggregate output to ________ and shifts the ________ curve to the ________, everything else held constant.
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A) right; fall
B) right; rise
C) left; fall
D) left; rise
Q:
Everything else held constant, if aggregate output is to the ________ of the IS curve, then there is an excess supply of goods which will cause aggregate output to ________.
A) right; fall
B) right; rise
C) left; fall
D) left; rise
Q:
When the interest rate rises,
A) planned investment falls.
B) planned investment rises.
C) planned investment will be unaffected.
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Q:
Keynes believed that unstable investment caused the Great Depression. Using the simple Keynesian model, explain how a fall in investment affects equilibrium output.
Q:
Researchers at the Federal Reserve found that M2 money demand functions performed ________ in the 1980s, with M2 velocity moving ________ with the opportunity cost of holding M2.
A) poorly; erratically
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B) overpredict; velocity
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B) severely overpredict the demand for money.
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Q:
"Bureaucratic gambling" refers to
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C) the strategy adopted by thrift regulators of lowering capital requirements and pursuing regulatory forbearance in the 1980s in the hope that conditions in the S&L industry would improve.
D) the risk that regulators took in going to Congress to ask for additional funds.
Q:
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A) declining interest rates from late 1979 until 1981.
B) the severe recession in 1981-82.
C) the disinflation from mid 1980 to early 1983.
D) the increase in energy prices in the early 80s.
Q:
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Q:
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C) providing a plan for orderly liquidation if necessary.
D) interest rate ceilings on time deposits.
Q:
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Q:
All of the following are common to banking crises in different countries except
A) financial liberalization or innovation.
B) weak bank regulatory systems.
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D) a dual banking system.
Q:
Prior to the 1980s, S&Ls and mutual savings banks were restricted almost entirely to
A) commercial real estate loans.
B) home mortgages.
C) education loans.
D) vacation loans.
Q:
During times of financial crisis, mark-to-market accounting
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B) leads to an increase in the financial firms' balance sheets since they can now get assets at bargain prices.
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A) screening; restrictive covenants
B) screening; branching restrictions
C) identifying; branching restrictions
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