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Discuss case study “In the News …Fed Economist: “No Evidence That QE Works” as Central Bank Starts UnwindingProgram”
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- discuss how money supply is determine by the central bank and economics activitiesWhat happens to the IS curve when the central bankdecides to raise interest rates to tighten monetary policy?Identify the effect of decrease in bank rates on either demand or supply curve and the equilibruim interst rates.
- If the central bank desired to increase spending in the economy, using the instruments ofmonetary policy, explain how the central bank can indirectly achieve this?Define and calculate the Monetary Multiplier. Give examples“Since financial crises can impart severe damage to theeconomy, a central bank’s primary goal should be toensure stability in financial markets.” Is this statementtrue, false, or uncertain? Explain.
- New money injected in the economy will have a multiplied effect on the macro-economy. True FalseDefine the term Liquidity?"If a central bank's desired intermediate target is a monetary aggregate (money supply), then its policy instrument will most likely be a reserve aggregate variable like the monetary base." Explain this based on the conduct of monetary policy in practice.
