a) If Bangladesh Bank wants to adopt expansionary monetary policy , what kinds of tools it can use ? Explain how these tools help BB achieving this target?
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a) If Bangladesh Bank wants to adopt expansionary
b) If Bangladesh Bank supports indirect transmission mechanism of monetary injection, will the expansionary monetary policy (taken by BB in Q 2.a) work? Why or why not? Give your opinion with suitable graphs. [Assume that Bangladesh economy is more like Keynesian economy and Investment demand curve is perfectly inelastic]
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- Consider a closed economy where the goods and money markets are described by the following relationships: C = 200 + 0.9(Y – T) 1 = 400 – 15r M = 200 + Y – 100r G = 150 T = 100 M = 2000 P = 2 Where Cis planned consumption, / is planned investment spending, Tis government tax revenues, G is government purchases, M is the money supply, P is the price level and r is the interest rate. Department of Economics a) Derive the two expressions for the IS and LM equilibrium relationships respectively. Sketch a graph of the two relationships. b) Calculate the equilibrium value of output Y and interest rate r (round off your answers to one decimal point). Compute also the level of consumption and investment spending in equilibrium and check whether the actual level of spending matches the equilibrium level of output.Which monetary policy tool can the Federal Reserve use to conduct an expansionary monetary policy (please state at least one instrument)? Which monetary policy instrument can the Fed use to conduct a restrictive monetary policy? Assume the country is experiencing high unemployment and a recession, such as during 2001, 2008-2009, and 2020. What is the Fed likely to do in this scenario? Discuss the effects of such policy on the economy. Can you give a specific example to what the Fed did during any of those recessions?16. Use the IS-LM-PC model to answer the following questions. In Japan, suppose there is a simultaneous increase in taxes and increase in the money supply. Explain what kind of open market operations the Bank of Japan could use to increase the money supply? Graphi- cally explain what short-run effect this particular policy mix will have on output and the interest rate. In addition, graphically explain what the resulting medium-run effect this policy mix will have on output, interest rate, and inflation rate
- Consider a closed economy where the goods and money markets are described by the following relationships: C = 500+ 0.8(Y-T) I= 500-10r - M P = = 0.1Y - 35r G = 800 T = 200 M = 1000 P = 2 Where C is planned consumption, / is planned investment spending, T is government tax revenues, G is government purchases, M is the money supply, P is the price level and r is the interest rate. b) Calculate the equilibrium value of output Y and interest rate r (round off your answers to one decimal point). Compute also the level of consumption and investment spending in equilibrium and check whether the actual level of spending matches the equilibrium level of output. d) If the Central Bank intends to pursue monetary policy in order to restore output to the same level before the fall in consumer confidence, how much should money supply change by? Use graphs to show the change in the economy and explain very carefully the monetary transmission mechanism e) Suppose that, instead of relying on monetary…1)Identify one possible expansionary monetary policy. 2)Carefully explain in as much detail as possible, how the chosen action will impact the money market? 3)illustrated the overall impact of the chosen action on the money market In 2019, while there was a mixed approach to monetary policy-setting in the Caribbean, overall the monetary policy stance in the region remained accommodative. Jamaica, for instance, continued to pursue an expansionary monetary policy with the Bank of Jamaica cutting its overnight rates four times in 2019. The overnight rates were reduced from 1.75% in December 2018 to a historic low of 0.50% in August 2019. In contrast, the Central Bank van Suriname increased the reserve requirement for foreign currency deposits and required that at least half of commercial banks’ USD cash deposits and all of the EUR deposits be held at the Bank, in order to maintain a stable exchange rate.Further, despite the subdued economic activity, the Central Bank of Trinidad…To https://aplia.apps.ng.cengage.com/ar/serviet/quiz?cx=bkhana-0031&quiz_action=takeQuiz&quiz_probGuid=... The following graph shows a decrease in short-run aggregate supply (AS) in a hypothetical economy where the currency is the dollar. Specifically, the short-run aggregate supply curve shifts to the left from AS₁ to AS2, causing the quantity of output supplied at a price level of 100 to fall from $200 billion to $150 billion. ? 200 AS 175 AS₁ 150 125 100 75 50 25 0 PRICE LEVEL 0 50 300 200 250 QUANTITY OF OUTPUT 100 150 350 400 Yo
- Consider a closed economy where the goods and money markets are described by the following relationships: C = 500+ 0.8(Y - T) I= 500-10r M b) P = 0.1Y - 35r G = 800 T = 200 1. 2. M Where C is planned consumption, / is planned investment spending, T is government tax revenues, G is government purchases, M is the money supply, P is the price level and r is the interest rate. = 1000 P = 2 a) Derive the two expressions for the IS and LM equilibrium relationships respectively. Sketch a graph of the two relationships. Calculate the equilibrium value of output Y and interest rate r (round off your answers to one decimal point). Compute also the level of consumption and investment spending in equilibrium and check whether the actual level of spending matches the equilibrium level of output. c) Due to some negative news concerning the impact of global warming on the economy, consumers are becoming more pessimistic about the future to the point of reducing autonomous consumption by 50. What is…3. Consider an alternative way of conducting monetary policy. Suppose that the cen- tral bank adopts a policy rule aiming at dampening fluctuations in aggregate economic activity. The policy takes the following form: i = io + iįY in which io > 0 and i > 0. This rule is called the Interest Rate Rule (IRR). 3.1) In the standard IS-LM diagram, show the IRR curve and its intersection with the IS curve.Consider a closed economy where the goods and money markets are described by the following relationships: C = 500+ 0.8(Y-T) I= 500-10r - M P 1. = = 0.1Y - 35r Where C is planned consumption, / is planned investment spending, T is government tax revenues, G is government purchases, M is the money supply, P is the price level and r is the interest rate. 2. G = 800 T = 200 M = 1000 P = 2 b) Calculate the equilibrium value of output Y and interest rate r (round off your answers to one decimal point). Compute also the level of consumption and investment spending in equilibrium and check whether the actual level of spending matches the equilibrium level of output. c) Due to some negative news concerning the impact of global warming on the economy, consumers are becoming more pessimistic about the future to the point of reducing autonomous consumption by 50. What is the immediate impact on income before the economy adjusts to its new equilibrium? What are the economy's equilibrium level of…
- E1 Suppose the Central Bank of Bothnia buys Treasury Bonds. What will be the impact on the price level and real GDP in the country of Bothnia? Would the purchase of treasury bonds be considered expansionary or contractionary policy AND would this be fiscal or monetary policy?Can you please help with the explanation of the below? In contemporary monetary theory, we do not normally think of using a money stock to implement monetary policy. By setting m-p, the log of the real money stock, equal to money demand y-b.i where y and i are ln(GDP) and the interest rate, create a money policy reaction function. Noting that p+y is the log of nominal GDP how could you interpret m in this case so as to make your equation approximate the reality in Australia?10. Over the long run, the money supply of the USA grows at 10% on average per year, while in Japan it grows at 5%. If there are no other major shocks to these economies, what should be the average annual percent change in the number of Yen per Dollar? Justify your answer and give clear explanations on the models/assumptions you rely on.
