Monetary Policy - iti Monetary Policy Monetary policy is the action of the Federal Reserve(the Fed to prevent or address extreme economic fluctuations

Monetary Policy - iti Monetary Policy Monetary policy is...

This preview shows page 1 - 3 out of 8 pages.

REAL GDP1. Suppose that initially the economy is at the intersection of AD and SPAS in Figure 4-7.1.(A) ÿNat monetary policy can the Fed implement to move the economy to full-employment?• i."(B) If the Fed is going to use open market operations, it should (buy / sell) Treasury securities.(C) The effect will (increase / decrease) Treasury security (bond) prices.(D) In the short run, what is the effect on nominal interest rates? Explain.(E) In the short run, what happens to real output? Shift the curve on the graph to show how theFed's action results in a change in real output and explain why the shift occurs.(F) In the short run, what happens to the price level? Explain how the Fed's action results in achange to the price level.Advanced Placement Economics Macroeconomics: Student Resource Manual © Coundl for Economic Education, New York, N.SL!49
.Ii:IhFigure 4-7.2Effects of Monetary Policy in the Economy (Inflation)LRASRAS/ILl,>,,dI..LIo¢€nADREAL GDP2. Suppose that initially the economy is at the intersection of AD and SPAS in Figure 4-7.2.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture