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 37 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
:D TYSM

skipfourms123

  • Member
  • Posts: 343
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

Although not all of the following muscle groups are commonly used, intramuscular injections may be given into the abdominals, biceps, calves, deltoids, gluteals, laterals, pectorals, quadriceps, trapezoids, and triceps.

Did you know?

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

Did you know?

Recent studies have shown that the number of medication errors increases in relation to the number of orders that are verified per pharmacist, per work shift.

Did you know?

A cataract is a clouding of the eyes' natural lens. As we age, some clouding of the lens may occur. The first sign of a cataract is usually blurry vision. Although glasses and other visual aids may at first help a person with cataracts, surgery may become inevitable. Cataract surgery is very successful in restoring vision, and it is the most frequently performed surgery in the United States.

Did you know?

The senior population grows every year. Seniors older than 65 years of age now comprise more than 13% of the total population. However, women outlive men. In the 85-and-over age group, there are only 45 men to every 100 women.

Affect. Affect.
Schemas Affect How We Encode and Remember Schemas Affect How We Encode and Remember
Factors That Affect Your Basal Metabolic Rate Factors That Affect Your Basal Metabolic Rate
Food policy can drive the food industry Food policy can drive the food industry
Factors That Affect BP Factors That Affect BP
Types of policy Types of policy
Video: Plant Defense Mechanisms from Pathogens

For a complete list of videos, visit our video library