1. Automatic stabilizers include 2. changes in inducted taxes and changes in needs- tested spending 3. which of the folloing taxes can slow the growth rate of real gdp? 4. a tax on interest income 5. An Economy is at a short-fun equilibrium as illustrated in the figure. An appropriate fiscal policy option to move the economy to full employment is to increase 6. Government exp. And move the economy to a full employment equ. At . B 7. a decrease in taxes shouldbe applied in a situation with 8. a recessionary gap 9. an example of automatic fiscal policy is 10. expenditure for unemployment compensation increases as economic growth slows 11. if an economy is in an equilibrium with an inflationary gap, policy- makers can use 12. Discretionary fiscal policy and decrease gov expenditure 13. if the goven. Uses fiscal policy to close a drecessionary gap, government 14. Expenditure can be increased by less than the gap because of the govern exp multiplier 15. a Reason why discretionary fiscal policy might move the economy away from potential gdp instead of toweard potential Gdp is that 16. it is difficult to know whether real GDP is above or below pot GDP 17. IF the economy is in equilibrium with real GDP less than potential GDP, there is _____ gap and a fiscal policy that ____ is appropriate 18. a recessiponary, increase aggregate demand 19. Fiscal policies that move the ecnomy toward pot GDP w/o a change in policy is called 20. automatic stablizers 21. An Income tax ____ pot GDP by shifting the labor ____ curve ___ 22. Decrease. Supply, leftward 23. If the gov. reduces expiditure on goods and services by 30 billion then aggregate demand 24. decrease amd rea; gdp decreases 25. IF gov expidenture on goods and servies in crease by 20 mil then aggregate demand 26. increase by more than 20 bil 27. Which of the following is limitation of discretionary fiscal policy 28. Law- making lags, estimateing pot GDP 29. The national debt is the amount 30. a debt outstanding that arises from past budget deficits.
Chapter 17 1.
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The new york fed conducts and open market _ to hit the new _ fed funds rate target. … The supply of money _ and the interest rate _ the supply of laonable funds_ and the long term interest rate _ …. Investment _ and aggregate demand_ with a multiplier affect. Purchase lower; increase, falls; increase; falls, increase increase The feds monetary policy instrument is the _ a monetary policy instrument is _ Fed funds rate variable that the fed can directly control or target closely The objectives of US monetary policy are to achieve Mazimum employment stable prices, and moderate long term I/R graph Lower interest rates are suppose _ but dispite having cut short-term interest rates by almost half since sept 2007 encourage consumers and business to spend more; consumers are reluctant to spend, businesses reluctant to invest, and banks reluctant to lend The fed makes an open market purchase, Explain how the feds actions change expenditure and influence the inflation rate. The supply of money _ and the interest rate _ the supply of loanable funds _ and investments _. Aggregate demand _ with a multiplier effect. Real GDP. In creases; falls; increases; increases; increases; increases; rises graph the goals of monetary policy are_ IN harmony in the long run and in conflict in the short run graph If the central bank takes no monetary policy action, the money wage rate will _ and aggregate supply will _ but the central bank can return the economy to full employment if it _ raose; decrease; makes an open market sale if the fed raises the fed funds rate target, they undertake an open market and _ the suplly reserves. Sale ; decrease graph when the FOMC decides to lower the fed funds rate target NY fed conducts an open market purchase to provide additional reserves to banking system
1. The fed _ influences the real interest rate in the short run and _ influence the real interest rate in the long run 2. Can, cannot 3. If real GDP exceepd pot. GDP, to move the economy to pot GDP the red 4. raises the fed funds rate to decrease Real GDP but not potiential 5. Discretionary monetary policy is defined as policy for which 6. policy is based on the judgement of the policy makers 7. to change the federal funds rate, the FED 8. uses open market operations to change the quanity of money 9. which of the following is NOT an effect from a change in the federal funds rate? 10. change in government expenditures 11. Which of the following is a problem in pursing monetary policy 12. The lag between a change in the quanitity of money and its effect on economic activity may be long 13. The economy is at the equilibrium shown at point a in the figure if the fed 14. Buys gov secrurites the economy move to B 15. Currently the fed targets 16. the fed funds rate 17. a Hike in the fed funds rate results in _ in the real interest rate which leads to a _ in investments 18. An increase, a decreaes 19. If the fed fears a recession, it 20. buys governemtn securities 21. In the long run, the real interest rate is determined by 22. saving supply and investment demand 23. a change in monetary policy affects 24. consumption expenditure, investment and net exports 25. when the fed worries about inflation, it _ the fed funds rate and, in the short run, _ the real interest rate 26. raises and raises 27. The main goals of monetary policy include all of the folling except 28. Keeping the long term nomnal interest rate equal to the real interes rate plus the inflation rate 29. IN the fhort run to decrease the interest rate the fed reserve _ the quantity of money by government secrrites 30. Increase buying