This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: If the Fed orders a contractionary monetary policy, describe what will happen to the following ... (Read 79 times)

anshika

  • Hero Member
  • *****
  • Posts: 510
on: Jun 29, 2018
If the Fed orders a contractionary monetary policy, describe what will happen to the following variables relative to what would have happened without the policy:
 
  a. The money supply
  b. Interest rates
  c. Investment
  d. Consumption
  e. Net Exports
  f. The aggregate demand curve
  g. Real GDP
  h. The price level

Question 2

Comment on the following statement. Taxing externality-producing activities may not eliminate damages.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

verrinzo

  • Sr. Member
  • ****
  • Posts: 346
Reply #1 on: Jun 29, 2018
Answer to Question 1

a. The money supply decreases
b. Interest rates rise
c. Investment decreases
d. Consumption decreases
e. Net exports decrease
f. The aggregate demand curve shifts to the left
g. Real GDP falls
h. The price level falls

Answer to Question 2

Taxes on these activities are not designed to eliminate externalities; they are simply meant to force decision makers to consider the full costs of their decisions. Even if we assume that a tax correctly measures all the damage done, the decision maker may find it advantageous to continue causing the damage.


anshika

  • Member
  • Posts: 510
Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it

ebonylittles

  • Member
  • Posts: 318
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

In most cases, kidneys can recover from almost complete loss of function, such as in acute kidney (renal) failure.

Did you know?

Multiple experimental evidences have confirmed that at the molecular level, cancer is caused by lesions in cellular DNA.

Did you know?

Though newer “smart” infusion pumps are increasingly becoming more sophisticated, they cannot prevent all programming and administration errors. Health care professionals that use smart infusion pumps must still practice the rights of medication administration and have other professionals double-check all high-risk infusions.

Did you know?

There used to be a metric calendar, as well as metric clocks. The metric calendar, or "French Republican Calendar" divided the year into 12 months, but each month was divided into three 10-day weeks. Each day had 10 decimal hours. Each hour had 100 decimal minutes. Due to lack of popularity, the metric clocks and calendars were ended in 1795, three years after they had been first marketed.

Did you know?

Bacteria have flourished on the earth for over three billion years. They were the first life forms on the planet.

This modified model of Easton’s systems theory puts government decision makers as the source of pol This modified model of Easton’s systems theory puts government decision makers as the source of pol
In 2009, historian Woody Holton described how Abigail Adams shrewdly invested in the Continental Con In 2009, historian Woody Holton described how Abigail Adams shrewdly invested in the Continental Con
Booker T. Washington in his office at Tuskegee Institute, 1900. Washington chose a policy of accommo Booker T. Washington in his office at Tuskegee Institute, 1900. Washington chose a policy of accommo
International Economics: Theory and Policy (10th Edition) International Economics: Theory and Policy (10th Edition)
Describe the Conceptual Forecasting Framework in your own words. Describe the Conceptual Forecasting Framework in your own words.
Representatives of major orders of placental mammals Representatives of major orders of placental mammals
Video: Effect of blood chemistry - stimuli, hyperventilation response and hypoventilation response

For a complete list of videos, visit our video library