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 80 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
Excellent

helenmarkerine

  • Member
  • Posts: 324
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

When blood is deoxygenated and flowing back to the heart through the veins, it is dark reddish-blue in color. Blood in the arteries that is oxygenated and flowing out to the body is bright red. Whereas arterial blood comes out in spurts, venous blood flows.

Did you know?

As many as 28% of hospitalized patients requiring mechanical ventilators to help them breathe (for more than 48 hours) will develop ventilator-associated pneumonia. Current therapy involves intravenous antibiotics, but new antibiotics that can be inhaled (and more directly treat the infection) are being developed.

Did you know?

Sperm cells are so tiny that 400 to 500 million (400,000,000–500,000,000) of them fit onto 1 tsp.

Did you know?

Vaccines prevent between 2.5 and 4 million deaths every year.

Did you know?

As of mid-2016, 18.2 million people were receiving advanced retroviral therapy (ART) worldwide. This represents between 43–50% of the 34–39.8 million people living with HIV.

Four main models that describe the relationship between ecosystem function and biodiversity. Four main models that describe the relationship between ecosystem function and biodiversity.
This chart illustrates the “drip down” model of government. In this, politics is formed by the soc This chart illustrates the “drip down” model of government. In this, politics is formed by the soc
Scientific monitoring with environmental policy (SOER) Scientific monitoring with environmental policy (SOER)
Describe the Conceptual Forecasting Framework in your own words. Describe the Conceptual Forecasting Framework in your own words.
The executive legislative "struggle" over foreign policy The executive legislative "struggle" over foreign policy
Types of policy Types of policy
Video: Interview with Person who has Panic Attacks

For a complete list of videos, visit our video library