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

Author Question: If there is an inflationary gap, what is the proper monetary policy to restore price stability? What ... (Read 81 times)

kodithompson

  • Hero Member
  • *****
  • Posts: 566
on: Jun 29, 2018
If there is an inflationary gap, what is the proper monetary policy to restore price stability? What actions can the Fed undertake to restore price stability?
 
  What will be an ideal response?

Question 2

The national debt is the amount
 
  A) by which government outlays exceed tax revenue in a given year.
  B) by which government tax revenue exceed outlays in a given year.
  C) of government outlays summed over time.
  D) of debt outstanding that arises from past budget deficits.
  E) of all future entitlement spending.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

macagnavarro

  • Sr. Member
  • ****
  • Posts: 334
Reply #1 on: Jun 29, 2018
Answer to Question 1

An inflationary gap occurs when real GDP exceeds potential GDP. With no action by the Fed, the inflationary gap will be closed by inflation occurring as the money wage rate rises and aggregate supply decreases. In order to avoid the inflation, the Fed needs to decrease aggregate demand and thereby decrease real GDP back to potential GDP. To decrease aggregate demand, the Fed must raise the federal funds rate. To do so, the Fed can sell government securities in an open market operation.

Answer to Question 2

D


kodithompson

  • Member
  • Posts: 566
Reply 2 on: Jun 29, 2018
Gracias!

T4T

  • Member
  • Posts: 348
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

Not getting enough sleep can greatly weaken the immune system. Lack of sleep makes you more likely to catch a cold, or more difficult to fight off an infection.

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?

If you could remove all of your skin, it would weigh up to 5 pounds.

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?

When taking monoamine oxidase inhibitors, people should avoid a variety of foods, which include alcoholic beverages, bean curd, broad (fava) bean pods, cheese, fish, ginseng, protein extracts, meat, sauerkraut, shrimp paste, soups, and yeast.

Major moons of Uranus in order of increasing distance (left to right), at their proper relative size Major moons of Uranus in order of increasing distance (left to right), at their proper relative size
A medical assistant using the proper technique when passing instruments to the physician. A medical assistant using the proper technique when passing instruments to the physician.
Vaginal medication administration: (b) proper insertion of the NuvaRing. Vaginal medication administration: (b) proper insertion of the NuvaRing.
Static Stability & Environmental Lapse Rate Static Stability & Environmental Lapse Rate
The Critical Weather Maker: Atmospheric Stability The Critical Weather Maker: Atmospheric Stability
How to create a price index to calculate inflation for a basket of goods How to create a price index to calculate inflation for a basket of goods
Video: Causes of Angina

For a complete list of videos, visit our video library