Under what economic circumstances would the Fed tend to use an expansionary monetary policy and when would it use a contractionary monetary policy? What would happen to the money supply in each of these situations?
What will be an ideal response?
The Fed would use an expansionary monetary policy if it is trying to stimulate the economy in times of economic recession. With an expansionary monetary policy, the money supply increases.
The Fed would use a contractionary monetary policy if it is trying to reduce inflationary pressure. With a contractionary monetary policy, the money supply decreases.
You might also like to view...
What are the major economic effects of rent ceilings?
What will be an ideal response?
As the value of the Gini coefficient approaches zero
A) the percentage of the population under the poverty line decreases. B) the percentage of the population under the poverty line increases. C) income distribution becomes more unequal. D) income distribution becomes less unequal.
A lower interest rate ________ Ap and thus causes ________ the IS curve
A) raises, movement downward along B) lowers, movement upward along C) raises, a parallel rightward shift of D) lowers, a parallel leftward shift of
Nominal GDP is calculated by using
a. prices set in a base year. b. average prices in all major cities. c. current prices d. prices charged by initial producers.