ECONOMICS 1120165 - 97 RefertoFigure15-7..Usingthestatic AD-, C B toA D C toD E AtoB A CtoB B EtoA 97 Answer E PageRef:905-906\/523-524 LearningOut

ECONOMICS 1120165 - 97 RefertoFigure15-7..Usingthestatic...

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97)Refer to Figure 15-7.Suppose the Fed lowers its target for the federal funds rate. Using the staticAD-ASmodel in the figure above, this situation would be depicted as a movement from97) A)CtoB.B)EtoA.C)BtoA.D)CtoD.E)AtoB.Answer: EPage Ref: 905-906/523-524Learning Outcome: Macro-12: Explain how monetary policy influences interest rates, aggregate demand, realGDP and inflation. 98)Refer to Figure 15-7.Suppose the Fed sells Treasury Bills in pursuit of contractionary monetarypolicy. Using the staticAD-ASmodel in the figure above, this situation would be depicted as amovement from Page Ref: 905-906/523-524Learning Outcome: Macro-12: Explain how monetary policy influences interest rates, aggregate demand, realGDP and inflation. 99)Refer to Figure 15-7.Suppose the economy is in a recession and no policy is pursued. Using thestaticAD-ASmodel in the figure above, this situation would be depicted as a movement from Page Ref: 905-906/523-524Learning Outcome: Macro-12: Explain how monetary policy influences interest rates, aggregate demand, realGDP and inflation. 100) Expansionary monetary policy to prevent real GDP from falling below potential real GDP wouldcause the inflation rate to be relatively ________ and real GDP to be relatively ________. Page Ref: 905-906/523-524Learning Outcome: Macro-12: Explain how monetary policy influences interest rates, aggregate demand, realGDP and inflation. 101) Which of the following describes what the Fed would do to pursue an expansionary monetarypolicy? A) use open market operations to sell Treasury billsB) raise the reserve requirementC) use open market operations to buy Treasury billsD) use discount policy to raise the discount rateAnswer: C101)Page Ref: 905-906/523-524Learning Outcome: Macro - 12: Explain how monetary policy influences interest rates, aggregate demand, real GDP and inflation. 29
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102) Contractionary monetary policy on the part of the Fed results in 102)Page Ref: 905-906/523-524Learning Outcome: Macro-12: Explain how monetary policy influences interest rates, aggregate demand, realGDP and inflation.
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