QUESTION 10 which statement best accurately describes a position which a central bank could take when comparing the shor
Posted: Sun Jul 03, 2022 1:02 pm
QUESTION 10
which statement best accurately describes a position which acentral bank could take when comparing the short-run and long-runscenarios that the economy is facing?
The economy is producing above its potential output and isexperiencing unemployment below its natural level. The central bankcould take a tighter monetary policy and sell more bonds in orderto cool down the economy and avoid higher levels of inflation inthe future.
The economy is producing above its potential output and isexperiencing unemployment above its natural level. The central bankcould take a tighter monetary policy by selling more bonds in orderto slow down the economy and bring it back to long-runequilibrium.
The economy is producing below its potential output and isexperiencing unemployment above its natural level. The central bankcould take a looser monetary policy by buying more bonds in orderto stimulate the economy and bring it out of recession.
The economy is producing below its potential output and isexperiencing unemployment above its natural level. The central bankcould take a tighter monetary policy by selling more bonds in orderto cool down the economy in order to avoid higher levels ofinflation in the future.
8.33333 points
QUESTION 11
If a central bank wants to lower the real interest rate in theeconomy, the can
buy more bonds. This will decrease the price of bonds, makingthem a more attractive investment for banks. It will take cash outof the hands of banks who buy their bonds from the central bank.Both of these effects decrease the amount of loanable funds in thebanking system, effectively decreasing supply and lowering nominalinterest rates.
sell more bonds. This will decrease the price of bonds, makingthem a relatively more attractive investment for banks compared tomaking loans. It will also take cash out of the hands of banks whobuy their bonds direclty from the central bank. Both of theseeffects decrease the amount of loanable funds in the bankingsystem, effectively decreasing supply and increasing nominalinterest rates.
buy more bonds. This will increase the price of bonds, makingthem a relatively less attractive investment for banks compared tomaking loans. It will also put cash into the hands of banks whosell their bonds to the central bank. Both of these effectsincrease the amount of loanable funds in the banking system,effectively increasing supply and lowering nominal interestrates.
sell more bonds. This will increase the price of bonds, makingthem a less attractive investment for banks. It will also put cashinto the hands of banks who sell their bonds to the central bank.Both of these effects increase the amount of loanable funds in thebanking system, effectively increasing supply and lowering nominalinterest rates.
8.33333 points
QUESTION 12
If a central bank wants to raise the real interest rate in theeconomy, the can
buy more bonds. This will decrease the price of bonds, makingthem a more attractive investment for banks. It will take cash outof the hands of banks who buy their bonds from the central bank.Both of these effects decrease the amount of loanable funds in thebanking system, effectively decreasing supply and lowering nominalinterest rates.
sell more bonds. This will decrease the price of bonds, makingthem a relatively more attractive investment for banks compared tomaking loans. It will also take cash out of the hands of banks whobuy their bonds direclty from the central bank. Both of theseeffects decrease the amount of loanable funds in the bankingsystem, effectively decreasing supply and increasing nominalinterest rates.
buy more bonds. This will increase the price of bonds, makingthem a relatively less attractive investment for banks compared tomaking loans. It will also put cash into the hands of banks whosell their bonds to the central bank. Both of these effectsincrease the amount of loanable funds in the banking system,effectively increasing supply and lowering nominal interestrates.
sell more bonds. This will increase the price of bonds, makingthem a less attractive investment for banks. It will also put cashinto the hands of banks who sell their bonds to the central bank.Both of these effects increase the amount of loanable funds in thebanking system, effectively increasing supply and lowering nominalinterest rates.
which statement best accurately describes a position which acentral bank could take when comparing the short-run and long-runscenarios that the economy is facing?
The economy is producing above its potential output and isexperiencing unemployment below its natural level. The central bankcould take a tighter monetary policy and sell more bonds in orderto cool down the economy and avoid higher levels of inflation inthe future.
The economy is producing above its potential output and isexperiencing unemployment above its natural level. The central bankcould take a tighter monetary policy by selling more bonds in orderto slow down the economy and bring it back to long-runequilibrium.
The economy is producing below its potential output and isexperiencing unemployment above its natural level. The central bankcould take a looser monetary policy by buying more bonds in orderto stimulate the economy and bring it out of recession.
The economy is producing below its potential output and isexperiencing unemployment above its natural level. The central bankcould take a tighter monetary policy by selling more bonds in orderto cool down the economy in order to avoid higher levels ofinflation in the future.
8.33333 points
QUESTION 11
If a central bank wants to lower the real interest rate in theeconomy, the can
buy more bonds. This will decrease the price of bonds, makingthem a more attractive investment for banks. It will take cash outof the hands of banks who buy their bonds from the central bank.Both of these effects decrease the amount of loanable funds in thebanking system, effectively decreasing supply and lowering nominalinterest rates.
sell more bonds. This will decrease the price of bonds, makingthem a relatively more attractive investment for banks compared tomaking loans. It will also take cash out of the hands of banks whobuy their bonds direclty from the central bank. Both of theseeffects decrease the amount of loanable funds in the bankingsystem, effectively decreasing supply and increasing nominalinterest rates.
buy more bonds. This will increase the price of bonds, makingthem a relatively less attractive investment for banks compared tomaking loans. It will also put cash into the hands of banks whosell their bonds to the central bank. Both of these effectsincrease the amount of loanable funds in the banking system,effectively increasing supply and lowering nominal interestrates.
sell more bonds. This will increase the price of bonds, makingthem a less attractive investment for banks. It will also put cashinto the hands of banks who sell their bonds to the central bank.Both of these effects increase the amount of loanable funds in thebanking system, effectively increasing supply and lowering nominalinterest rates.
8.33333 points
QUESTION 12
If a central bank wants to raise the real interest rate in theeconomy, the can
buy more bonds. This will decrease the price of bonds, makingthem a more attractive investment for banks. It will take cash outof the hands of banks who buy their bonds from the central bank.Both of these effects decrease the amount of loanable funds in thebanking system, effectively decreasing supply and lowering nominalinterest rates.
sell more bonds. This will decrease the price of bonds, makingthem a relatively more attractive investment for banks compared tomaking loans. It will also take cash out of the hands of banks whobuy their bonds direclty from the central bank. Both of theseeffects decrease the amount of loanable funds in the bankingsystem, effectively decreasing supply and increasing nominalinterest rates.
buy more bonds. This will increase the price of bonds, makingthem a relatively less attractive investment for banks compared tomaking loans. It will also put cash into the hands of banks whosell their bonds to the central bank. Both of these effectsincrease the amount of loanable funds in the banking system,effectively increasing supply and lowering nominal interestrates.
sell more bonds. This will increase the price of bonds, makingthem a less attractive investment for banks. It will also put cashinto the hands of banks who sell their bonds to the central bank.Both of these effects increase the amount of loanable funds in thebanking system, effectively increasing supply and lowering nominalinterest rates.