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

Author Question: How does an expansionary monetary policy affect aggregate expenditures according to the bank lending ... (Read 30 times)

elizabeth18

  • Hero Member
  • *****
  • Posts: 559
on: Jun 30, 2018
How does an expansionary monetary policy affect aggregate expenditures according to the bank lending channel?
 
  What will be an ideal response?

Question 2

The idea that government budget deficits do not matter under certain circumstances is
 
  A) called the Friedman-Lucas theory.
  B) called the Ricardian equivalence theorem.
  C) attributed to Edward Prescott and Finn Kydland.
  D) preposterous.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

bitingbit

  • Sr. Member
  • ****
  • Posts: 323
Reply #1 on: Jun 30, 2018
Answer to Question 1

In the bank lending channel, an expansionary monetary policy causes aggregate expenditure to increase for two reasons: (1 ) the increase in households' and firms' spending from the drop in interest rates, and (2 ) the increased availability of bank loans. In other words, if banks expand deposits by lowering interest rates on loans, the amounts that bank-dependent borrowers can borrow and spend increases at any real interest rate.

Answer to Question 2

B


elizabeth18

  • Member
  • Posts: 559
Reply 2 on: Jun 30, 2018
Wow, this really help

lkanara2

  • Member
  • Posts: 329
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

Fungal nail infections account for up to 30% of all skin infections. They affect 5% of the general population—mostly people over the age of 70.

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.

Did you know?

A strange skin disease referred to as Morgellons has occurred in the southern United States and in California. Symptoms include slowly healing sores, joint pain, persistent fatigue, and a sensation of things crawling through the skin. Another symptom is strange-looking, threadlike extrusions coming out of the skin.

Did you know?

In the United States, there is a birth every 8 seconds, according to the U.S. Census Bureau's Population Clock.

Did you know?

Prostaglandins were first isolated from human semen in Sweden in the 1930s. They were so named because the researcher thought that they came from the prostate gland. In fact, prostaglandins exist and are synthesized in almost every cell of the body.

Three ways that factors affect mortality in response to changes in population density. Three ways that factors affect mortality in response to changes in population density.
Bank teller assisting with customer service. Bank teller assisting with customer service.
Mechanisms of action of antiepileptic drugs that affect GABA. Mechanisms of action of antiepileptic drugs that affect GABA.
The West Bank Challenge The West Bank Challenge
International Economics: Theory and Policy (10th Edition) International Economics: Theory and Policy (10th Edition)
Piggy bank Piggy bank
Video: Ionic bonds - role of ions in the body

For a complete list of videos, visit our video library