Exam 13: Countercyclical Macroeconomic Policy

Quantitative easing occurs when the Fed ________.

Which of the following is true of the 2008 Troubled Asset Relief Program (TARP)?

If consumers save the entire amount of the increase in their disposable income due to a tax cut,the tax cut will ________.

If the nominal interest rate falls,everything else remaining unchanged,________.

If the value of a government taxation multiplier is 1.8,which of the following is likely to be true if all other variables remain unchanged?

To ________ the long-term real interest rate,the Fed needs to ________.

Scenario: The following figure shows the federal funds market. Assume that the market of reserves is in equilibrium at $500 billion in reserves and a 3 percent federal funds rate. -Refer to the scenario above.If the Fed completes an open market sale of bonds that changes the quantity of reserves by $400 billion,then the federal funds rate will ________.

Scenario: The following figure shows the federal funds market. Assume that the market of reserves is in equilibrium at point (R₀, i₀). -Refer to the scenario above.If the Fed undertakes an open market sale of bonds,________.

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

Which of the following is likely to happen if the quantity of bank reserves held at the Fed increases?

How did households use the tax rebates in the 2001 Economic Growth and Tax Relief Reconciliation Act and what was the result on consumption?

If the expansionary effect of additional government expenditure ________ the contractionary effect of the fall in private investment,the labor demand curve ________.

If the Fed wants to stimulate an economy,it will ________.

How should the central bank of a country design its monetary policy during a recession if the nominal interest rate has already hit the zero lower bound?

Which of the following is likely to be true when an economy is in a boom?

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

________ occurs when the Fed creates a large amount of reserves to buy long-term bonds from banks.

What was the main finding of Ramey's study on government expenditure multipliers?

Assuming all else equal,if the Fed is expected to adopt a contractionary monetary policy,________.

Scenario: The following figure shows the federal funds market. Assume that the market of reserves is in equilibrium at point (R₀, i₀). -Refer to the scenario above.If the Fed uses an expansionary monetary policy,the new equilibrium quantity of reserves is ________ and the new federal funds rate is ________.