Question

2. Activist rules are monetary policy rules that change with the business cycle. are rules that...

2. Activist rules are monetary policy rules

  1. that change with the business cycle.

  2. are rules that adjust with deviations from potential GDP, but not inflation.

  3. are rules that adjust when inflation deviates from target, but do not respond to deviations from GDP.

  4. that do not adjust with the business cycle changes.

3. Over long periods of time,

A. there is a positive, linear relationship between the rate of money growth and inflation.

B. there is no predictable relationship between the rate of money growth and inflation.

C. there is a stable relationship between the rate of GDP growth and inflation.

D. money growth leads to growth in GDP.
E. GDP growth leads to inflation.

4. All else constant, a decline in the nominal interest rate A. leads to an increase in consumption and investment.
B. leads to a decrease in consumption and investment.
C. leads to an increase in consumption and decrease in investment. D. leads to a decrease in consumption and an increase in investment.

Homework Answers

Answer #1

2) that change with the business cycle. This is because these are actively devised from the changes occurring in the business cycles. Monetary policy has active rules when money supply is influenced by the recessions and expansions of business cycles

3)  there is a positive, linear relationship between the rate of money growth and inflation. This is because in the long run real GDP is unaffected by he monetary policy changes. However, price level or inflation rate exhibit a similar trend implying that the relationship is positive or direct

4) leads to an increase in consumption and investment. When there is a decline in rate of interest, saving falls and investment rises. This indicates that consumption should increase.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
17. The Taylor Rule is a type of discretionary policy. an activist policy that suggests a...
17. The Taylor Rule is a type of discretionary policy. an activist policy that suggests a target for the Federal Funds rate based on economic conditions. an activist policy that suggests a target for the inflation rate based on economic conditions. a non-activist rule that suggests a constant rate of money growth regardless of economic conditions. 18. Over short periods of time, A. real GDP growth is stable. B. velocity of money is stable. C. growth in velocity is volitile....
Question 11 pts Each of the following is an exogenous business cycle theory except the ___________...
Question 11 pts Each of the following is an exogenous business cycle theory except the ___________ theory. resource availability war monetary changes in purchases by foreigners Flag this Question Question 21 pts Which of the following is an endogenous factor of the business cycle? the innovation of new technology. the inventory cycle. underconsumption. all of the above. Flag this Question Question 31 pts An inflation hedge is a good that: declines in value during a period of high inflation can...
Real business cycle theory suggests the business cycle is caused by: Select one: a. discretionary monetary...
Real business cycle theory suggests the business cycle is caused by: Select one: a. discretionary monetary policy. b. “animal spirits.” c. protectionism. d. fluctuations in the rate of productivity. The school of thought that monetary policy should be the main tool of stabilization policy, that is skeptical about the use of fiscal policy, and that recognizes constraints on policy imposed by the natural rate of unemployment and the political business cycle is: Select one: a. classical macroeconomics. b. the Great...
QUESTION 8 Monetary policy impacts GDP mainly through its effect on… a. government spending. b. investment....
QUESTION 8 Monetary policy impacts GDP mainly through its effect on… a. government spending. b. investment. c. taxes. d. consumption. e. net exports. QUESTION 10 Which of the following best describes the sequence of events in the conduct of contractionary monetary policy using open market operations (in an economy with low inflation and a stable banking system)? a. The Fed lowers the interest rate, which leads to an increase in intended investment spending and an increase in the supply of...
1. Which of the following is an assumption of real business cycle theory? A prices or...
1. Which of the following is an assumption of real business cycle theory? A prices or wages are sticky (inflexible); B money’s velocity is stable and predictable C technology (supply-side) shocks are the primary cause of business cycles D business cycles are caused by a mismatch in timing between savings, investment, and consumption 2. Which of the following is an assumption of New Keynesian theory? A prices or wages are sticky (inflexible) B money’s velocity is stable and predictable C...
Using the concepts of fiscal/monetary policies, active/passive policies, and policy by rule/discretion, indicate whether the policy...
Using the concepts of fiscal/monetary policies, active/passive policies, and policy by rule/discretion, indicate whether the policy is a monetary or a fiscal policy, an active or a passive policy, and a policy by rules or with discretion for each of the following policies a.he central bank follows a policy of allowing the money supply to grow at a constant 4 percent per year; b. the government follows a policy of keeping government spending over a calendar year equal to government...
Here are 3 monetary policy rules. Assume that PPP, Quantity Theory, and the Fisher effect are...
Here are 3 monetary policy rules. Assume that PPP, Quantity Theory, and the Fisher effect are correct. a. The Swiss National Bank (central bank) targets money supply growth and sets it at 8% per year. The growth rate of real Swiss GDP is 3%. What is Switzerland’s inflation rate? What money supply growth rate would result in 2% inflation? b. The Reserve Bank of New Zealand targets the nominal interest rate. Its target is 6%. The real interest rate is...
1.The Fed prefers to focus on the interest rate rather than growth in the money supply...
1.The Fed prefers to focus on the interest rate rather than growth in the money supply because a.it does not like to conduct open market operations. b.the money supply is too unpredictable. c.it makes inflation more predictable. d.money demand is too volatile. e.it is easier to fix the interest rate than maintain growth in the money supply. 2. Assume the Fed has complete control over the money supply. If the demand for money were greater than the supply of money,...
1- Which of the following is a monetary policy response to the coronavirus pandemic? I. reducing...
1- Which of the following is a monetary policy response to the coronavirus pandemic? I. reducing interest rates on loans to banks. II. Providing $1,200 to American's making $75,000 or less. III. making direct loans to primary dealers of government bonds. Providing $1,200 to American's making $75,000 or less. a) III only. b) I and II only. c) II and III only. d) I, II, and III. e) I and III only. 2- Which of the following is a monetary...
Periods of inflation are generally characterized by a decline in The price level. Total intended spending....
Periods of inflation are generally characterized by a decline in The price level. Total intended spending. Nominal GDP. The supply of money. The value of money. In a Keynesian model, a decrease in the money supply Shifts the investment function upward. Shifts the C + I + G + (EX – IM) line downward. Causes interest rates to fall. Leads to an increase in the GDP. Has no effect on the level of economic activity. The difference between the budget...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT