Question Details

The implication for monetary policy of going above this comfort zone is that 



1. “To stimulate the economy the government could give money away. The danger here is that it could trigger a bond market crash.” This would happen because 
a)	the extra wealth would bid up bond prices 
b)	the extra money would cause inflation 
c)	the extra wealth would increase unemployment 
d)	the extra money would lower interest rates 

2. “The European Central Bank is becoming increasingly anxious about persistently strong money supply growth; dynamic growth in M3, a broad measure of money supply, is being seen at the ECB as ________ and is strengthening arguments against __________ despite concern over the fragility of the recovery in the eurozone.” The blanks are best filled with 
a)	an inflationary danger; an interest rate cut 
b)	an inflationary danger; an interest rate increase 
c)	an unemployment danger; an interest rate cut 
d)	an unemployment danger; an interest rate increase 

3. “The Fed- latest policy statement made it clear that an accommodative policy will remain in effect until a full-fledged economic recovery arrives.” An “accommodative” policy here means 
a)	a tight monetary policy 
b)	an easy monetary policy 
c)	a tight fiscal policy 
d)	an easy fiscal policy 

4. “Core prices, as measured by the Fed- preferred index based on personal consumption expenditures, are up 2.5 percent over the past year, above the Bernanke comfort zone of 1 to 2 percent.” The implication for monetary policy of going above this comfort zone is that 
a)	the money supply should be increased 
b)	interest rates should be lowered 
c)	monetary policy should be tightened 
d)	monetary policy needs to focus on consumer spending 

5. “The FMOC next meets on Oct.28 and 29. Between now and then, officials will consider whether additional cuts are likely to have their desired effect of ….” 
This statement is best completed by 
a)	decreasing the budget deficit 
b)	lowering inflation 
c)	stimulating the economy 
d)	increasing unemployment 




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