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 49 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
Great answer, keep it coming :)

shailee

  • Member
  • Posts: 392
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

The first monoclonal antibodies were made exclusively from mouse cells. Some are now fully human, which means they are likely to be safer and may be more effective than older monoclonal antibodies.

Did you know?

About 60% of newborn infants in the United States are jaundiced; that is, they look yellow. Kernicterus is a form of brain damage caused by excessive jaundice. When babies begin to be affected by excessive jaundice and begin to have brain damage, they become excessively lethargic.

Did you know?

There are more bacteria in your mouth than there are people in the world.

Did you know?

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

Did you know?

Earwax has antimicrobial properties that reduce the viability of bacteria and fungus in the human ear.

The following terms describe types of body movement that occur at the diarthrotic joints The following terms describe types of body movement that occur at the diarthrotic joints
Describe how fat is digested, absorbed, and transported in the body Describe how fat is digested, absorbed, and transported in the body
Describe the development of atherosclerosis, including its role in the risk of heart disease Describe the development of atherosclerosis, including its role in the risk of heart disease
Describe the Conceptual Forecasting Framework in your own words. Describe the Conceptual Forecasting Framework in your own words.
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
Video: Ventilation - phases and driving forces

For a complete list of videos, visit our video library