This topic contains a solution. Click here to go to the answer

Author Question: If there is an inflationary gap, what is the proper monetary policy to restore price stability? What ... (Read 55 times)

kodithompson

  • Hero Member
  • *****
  • Posts: 566
If there is an inflationary gap, what is the proper monetary policy to restore price stability? What actions can the Fed undertake to restore price stability?
 
  What will be an ideal response?

Question 2

The national debt is the amount
 
  A) by which government outlays exceed tax revenue in a given year.
  B) by which government tax revenue exceed outlays in a given year.
  C) of government outlays summed over time.
  D) of debt outstanding that arises from past budget deficits.
  E) of all future entitlement spending.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

macagnavarro

  • Sr. Member
  • ****
  • Posts: 334
Answer to Question 1

An inflationary gap occurs when real GDP exceeds potential GDP. With no action by the Fed, the inflationary gap will be closed by inflation occurring as the money wage rate rises and aggregate supply decreases. In order to avoid the inflation, the Fed needs to decrease aggregate demand and thereby decrease real GDP back to potential GDP. To decrease aggregate demand, the Fed must raise the federal funds rate. To do so, the Fed can sell government securities in an open market operation.

Answer to Question 2

D




kodithompson

  • Member
  • Posts: 566
Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it


vickybb89

  • Member
  • Posts: 347
Reply 3 on: Yesterday
:D TYSM

 

Did you know?

The U.S. Preventive Services Task Force recommends that all women age 65 years of age or older should be screened with bone densitometry.

Did you know?

The people with the highest levels of LDL are Mexican American males and non-Hispanic black females.

Did you know?

Tobacco depletes the body of vitamins A, C, and E, which can result in any of the following: dry hair, dry skin, dry eyes, poor growth, night blindness, abscesses, insomnia, fatigue, reproductive system problems, sinusitis, pneumonia, frequent respiratory problems, skin disorders, weight loss, rickets, osteomalacia, nervousness, muscle spasms, leg cramps, extremity numbness, bone malformations, decayed teeth, difficulty in walking, irritability, restlessness, profuse sweating, increased uric acid (gout), joint damage, damaged red blood cells, destruction of nerves, infertility, miscarriage, and many types of cancer.

Did you know?

People who have myopia, or nearsightedness, are not able to see objects at a distance but only up close. It occurs when the cornea is either curved too steeply, the eye is too long, or both. This condition is progressive and worsens with time. More than 100 million people in the United States are nearsighted, but only 20% of those are born with the condition. Diet, eye exercise, drug therapy, and corrective lenses can all help manage nearsightedness.

Did you know?

The National Institutes of Health have supported research into acupuncture. This has shown that acupuncture significantly reduced pain associated with osteoarthritis of the knee, when used as a complement to conventional therapies.

For a complete list of videos, visit our video library