Question

Great Recession is an example of 1. negative supply shock 2. negative demand shock 3.positive demand...

Great Recession is an example of

1. negative supply shock

2. negative demand shock

3.positive demand shock

4. positive supply shock

all of the following are nontraditional tools of monetary policy except

1.Buying and selling of bonds thru open market operations

2.buying long term bonds to influence mortgage rates

3.guaranteeing loans by banks for private businesses

4.bailing out investment banks

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Answer #1

Answer Option B ) negative demand shock-

Negatie demand shock is sudden fall in demand of goods and services . A Great recession is an instance of negative demand shock.Recession means fall in economic activity. Great recession took place in 2007 and great recession was concerned with subprime mortgage crisis.Due to that demand of people fall to great extent.

Answer Option A) .Buying and selling of bonds thru open market operations

All other are non traditional method . The reason is that Buying and selling of bonds thru open market operations was used by central bank during the Great recession in 2007=2008.

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