Question Details

Monetary policy is discriminatory because it has a relatively large impact on 




1. "Bonds rallied sharply yesterday, cheered on by the news that the recession isn't over yet. Prices climbed by as much as $8.75 for each $1,000 face amount in the U.S. government securities market after the Commerce Department reported that GDP fell by 0.1 percent in the second quarter." Bad news rallies bonds because it 
a) may cause the government to lower taxes 
b) may cause the Fed to decrease interest rates 
c) is usually accompanied by higher interest rates 
d) may cause the Fed to decrease the money supply 
2. "The decline in both the number of payroll jobs and hours worked surprised many analysts, who said the report put new pressure on the Fed to .........." Complete this clipping. 
a) lower interest rates b) increase interest rates 
c) decrease the money supply d) keep money growth constant 
3. "However, with the sharp fall in interest rates, central bank officials expect a pick-up in economic activity that will bring about a movement out of recession and an upsurge in monetary growth." The pick-up in economic activity will bring about an upsurge in monetary growth because 
a) a policy of fixed money growth requires this 
b) higher economic activity means higher money demand which determines money supply 
c) the pick-up in economic activity is because of a higher money supply - the clipping has it backwards 
d) the monetary authorities will match the higher money demand to prevent interest rate increases which could abort the movement out of recession 
4. "The proper lines of action for controlling inflation are not too difficult to envisage. "First, we must stop relying on monetary policy to do the job. The monetary tool has been easiest and most convenient for all governments to use because it requires no legislation. It has been given a good trial. But it hasn't worked, and its economic impact has been discriminatory." Monetary policy is discriminatory because it has a relatively large impact on 
a) rural versus urban people b) southern people versus northern people 
c) the manufacturing versus service industry 
d) the residential versus non-residential construction industry 
5. "The release of U.S. housing starts in April - down 17 percent to their lowest level in eight years - drove North American bond markets higher yesterday." This news increased bond prices because it puts pressure on the Fed to 
a) fight inflation b) raise interest rates 
c) lower interest rates d) keep money growth constant




Economics Assignment Help, Economics Homework help, Economics Study Help, Economics Course Help