Exam 18: Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

When the Fed is pursuing contractionary monetary policy it will tend to depreciate the value of the dollar and hence increase net exports, other things equal.

When Fed policy is being used to offset an inflationary gap, which of the following variables increases as a result?​

Which of the following is true?​

If M increases and V decreases:​

An unexpected change in nominal interest rate changes real interest rate by ____ in the short run.​

The implementation lag is _____ for fiscal than for monetary policy; the lag before the effects of monetary policy on real output and unemployment is ____ than for its effects on real output and unemployment:

Other things equal, monetary policy to offset a contractionary gap will tend to​

If the velocity of money (V) and real output (Q) were increasing at approximately the same rate, then:​

Based on the situation depicted in the graph below, which of the following would be an appropriate monetary policy response?​

If there is currently an inflationary gap in the economy the Fed could work toward recovery through an open market sale of government securities.

When choosing how much money they wish to hold in their financial portfolios, people trade off money's advantage of liquidity against the opportunity cost of holding money rather than other financial assets.

The problem of time lags in making policy changes is less acute for monetary policy than it is for fiscal policy.

What is the equation of exchange? What are the variables, which are in it, and how do they relate to each other?

Which of the following decreases Money Demand?

If the Fed wanted to reduce the federal funds interest rate, it might:​

At a higher nominal interest rate, the demand for money decreases.

When there is a liquidity trap, when the Fed adds bank reserves, there is a large effect on borrowing, investment and aggregate demand.

An increase in the money supply:

Why is the time lag for making fiscal policy changes longer than for making monetary policy changes?

Which of the following increases Money Demand?