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

Author Question: The inflation rate in Genovia has been rising constantly. What can the central bank of the country ... (Read 55 times)

FButt

  • Hero Member
  • *****
  • Posts: 519
The inflation rate in Genovia has been rising constantly. What can the central bank of the country do to control inflation?
 
  What will be an ideal response?

Question 2

An increase in bond prices will most likely result in
 
  A) a decrease in the quantity demanded of money.
  B) an increase in the quantity demanded of money.
  C) an increase in the opportunity cost of holding money.
  D) an increase in interest rates.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

softEldritch

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

The central bank of Genovia should reduce the quantity of bank reserves deposited at the central bank by selling government bonds to private banks. This will lead to an increase in the federal funds rate which will in turn lead to an increase in the long-term interest rate. As a result, both consumption and investment will fall. A fall in consumption and investment leads to a decrease in aggregate demand. As a result, the aggregate price level will fall.

Answer to Question 2

B




FButt

  • Member
  • Posts: 519
Reply 2 on: Jun 30, 2018
:D TYSM


chereeb

  • Member
  • Posts: 326
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

Did you know?

Approximately one in three babies in the United States is now delivered by cesarean section. The number of cesarean sections in the United States has risen 46% since 1996.

Did you know?

In inpatient settings, adverse drug events account for an estimated one in three of all hospital adverse events. They affect approximately 2 million hospital stays every year, and prolong hospital stays by between one and five days.

Did you know?

Adults are resistant to the bacterium that causes Botulism. These bacteria thrive in honey – therefore, honey should never be given to infants since their immune systems are not yet resistant.

Did you know?

Many medications that are used to treat infertility are injected subcutaneously. This is easy to do using the anterior abdomen as the site of injection but avoiding the area directly around the belly button.

Did you know?

To combat osteoporosis, changes in lifestyle and diet are recommended. At-risk patients should include 1,200 to 1,500 mg of calcium daily either via dietary means or with supplements.

For a complete list of videos, visit our video library