Exam 13: Countercyclical Macroeconomic Policy

Scenario: The following table shows the initial balance sheets of Bank A and the Fed. Suppose that the Fed then buys $10 million in bonds from Bank A. -Refer to the scenario above.After this transaction,the Fed's total liabilities equal ________.

The Taylor rule says that the ________ is,the lower will be the federal funds rate.

Scenario: The following table shows the initial balance sheets of Bank A and the Fed. Suppose that the Fed then buys $10 million in bonds from Bank A. -Refer to the scenario above.After this transaction,Bank A's assets ________ and liabilities ________.

Which of the following is likely to happen if the Fed conducts a contractionary monetary policy?

Contractionary fiscal policy uses ________ government spending and ________ taxes to decrease aggregate economic activity.

If the Fed increases the supply of bank reserves,________.

Explain the goal of a countercyclical monetary policy and how it is implemented.

Scenario: The following table shows the initial balance sheets of Bank A and the Fed. Suppose that the Fed then buys $10 million in bonds from Bank A. -Refer to the scenario above.After this transaction,the Fed's Treasury bonds equal ________.

If the value of the government multiplier is 1.5,which of the following is likely to be true if all other variables remain unchanged?

Which of the following statements is true?

An increase in government expenditure shifts the ________.

Which of the following happens if the Fed buys bonds from a private bank?

The Fed usually prefers the inflation rate to hover around ________.

What do countercyclical fiscal and monetary policies have in common? i.They are both used to reduce economic fluctuations. ii.They both work by shifting the labor demand curve.

If the Fed can communicate that it will maintain a(n)________ for a long period of time,the long-term nominal interest rate will remain ________.

If the nominal interest rate is 8.25 percent and the inflation rate is 3 percent,the real interest rate is ________.

If the Fed wants to decrease the federal funds rate,it would

Countercyclical policies ________.

If the people of Arissa are expecting the central bank to conduct an expansionary monetary policy for several years,how will the long-run real interest rate in Arissa be affected?

Contractionary fiscal policy leads to a ________.