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

Author Question: If the Fed orders a contractionary monetary policy, describe what will happen to the following ... (Read 77 times)

anshika

  • Hero Member
  • *****
  • Posts: 510
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
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 :)


aruss1303

  • Member
  • Posts: 314
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

 

Did you know?

Nitroglycerin is used to alleviate various heart-related conditions, and it is also the chief component of dynamite (but mixed in a solid clay base to stabilize it).

Did you know?

Human neurons are so small that they require a microscope in order to be seen. However, some neurons can be up to 3 feet long, such as those that extend from the spinal cord to the toes.

Did you know?

Women are two-thirds more likely than men to develop irritable bowel syndrome. This may be attributable to hormonal changes related to their menstrual cycles.

Did you know?

Stevens-Johnson syndrome and Toxic Epidermal Necrolysis syndrome are life-threatening reactions that can result in death. Complications include permanent blindness, dry-eye syndrome, lung damage, photophobia, asthma, chronic obstructive pulmonary disease, permanent loss of nail beds, scarring of mucous membranes, arthritis, and chronic fatigue syndrome. Many patients' pores scar shut, causing them to retain heat.

Did you know?

Patients who cannot swallow may receive nutrition via a parenteral route—usually, a catheter is inserted through the chest into a large vein going into the heart.

For a complete list of videos, visit our video library