Exam 13: Countercyclical Macroeconomic Policy

The government of Arissa increased its spending by $100 billion.However,the corresponding change in output was much smaller than that predicted by the government expenditure multiplier.This occurs because of ________.

An expansionary monetary policy ________ in an economy.

How did TARP help the banks in the United States during the financial crisis of 2007-2009?

If the Fed buys bonds from a private bank,________.

Briefly describe the sequence of events in a typical expansionary monetary policy process.

Why do policymakers sometimes use policies to limit growth?

Explain the concept of the zero lower bound.

The central bank conducts countercyclical ________ policies by manipulating ________.

Banks in Perylia charge an interest rate of 4 percent for overnight loans to one another.How will this rate change if the central bank of Perylia engages in open market operations to purchase bonds?

Why are the currently proposed policies on infrastructure spending and tax cuts not likely to be effective in the short-run?

Which of the following is likely to happen if the government lowers its expenditure?

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 Reserves equal ________.

A fiscal policy of subsidizing wages will lead to a(n)________ in ________.

The inflation rate in Jenovia has been rising constantly.What can the central bank of the country do to control inflation?

If expenditure by the government of a country increases,________.

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 total assets equal ________.

If tax rates in a country increase,________.