Please do ABC! For each of the following scenarios, indicate if it would necessarily lead to crowding out or not, andexplain your reasoning. Assume a closed economy.(a) The Federal Reserve pursues an expansionary monetary policy.(b) Assume federal outlays exceed receipts when a large number of people leave the labor force to takeadvantage of a federal higher education grant.(c) The government decreases taxes and increases spending by a greater amount.(d) Assume that federal outlays exceed receipts by $40 billion. Unemployment falls below NRU and thegovernment collects $65 billion more in tax revenue than expected.Assume a closed economy is in a recession.(e) Draw a fully labeled AD-AS model of this economy.(f) Congress passes a stimulus bill to address the situation. What type of fiscal policy is the bill?(g) The goal of the stimulus bill is to restore full employment. On your graph from part (e), illustrate theimpact of the new policy on real output and the price level, assuming the policy is effective.(h) Assume that the federal budget was in balance before the policy from part (f) takes effect. Will thepolicy cause crowding out? Explain.(i) Assume that the Federal Reserve takes a policy action to keep interest rates low. Illustrate the impactof this action on a fully labeled money market graph.

(a) The Federal Reserve will not crowd out private investment by pursuing an expansionary monetary…

(a) The Federal Reserve pursues an expansionary monetary policy. (b) Assume federal outlays exceed receipts when a large number of people leave the labor force to take advantage of a federal higher education grant. (c) The government decreases taxes and increases spending by a greater amount. (d) Assume that federal outlays exceed receipts by $40 billion. Unemployment falls below NRU and the government collects $65 billion more in tax revenue than expected.

(a) The Federal Reserve pursues an expansionary monetary policy. (b) Assume federal outlays exceed receipts when a large number of people leave the labor force to take advantage of a federal higher education grant. (c) The government decreases taxes and increases spending by a greater amount. (d) Assume that federal outlays exceed receipts by $40 billion. Unemployment falls below NRU and the government collects $65 billion more in tax revenue than expected.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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(a) Suppose that the economy of Microland is expanding rabidly. Due to this rapid expansion, the Federal Reserve Bank is pursuing a contractionary monetary policy. Draw clearly labeled graphs for each market (Money market, Goods Market and Investment) to show the effects of this policy on the equilibrium interest rate, investment and output. (b) Suppose that the economy of Macroland is expanding rabidly. Due to this rapid expansion, the Federal Government is pursuing a contractionary fiscal policy. Draw clearly labeled graphs for each market (Money market, Goods Market and Investment) to show the effects of this policy on the equilibrium interest rate, investment and output. Is there any crowding-out due to the contractionary fiscal policy?
2. Which of the following is a fiscal policy that would increase aggregate demand in the short-run? (A) A decrease in personal income taxes (B) A decrease in government spending (C) An increase in corporate income taxes (D) A purchase of government bonds by the Federal Reserve
One of the main arguments against using Fiscal Policy is the crowding out effect. Suppose the government uses government purchases to stimulate the economy. a) Explain the crowding out effect in detail using a graph for the bond market, the money market, the foreign exchange market, and the AD SRAS LRAS model. b). Explain quantitative easing? c) If the Fed’s current policy is quantitative easing, do you think that there is a danger of the government’s current fiscal policy being crowded out? Why or Why not? Explanation required for credit.
All else being equal, if a central bank sells government bonds from the market it would: a. decrease the money supply. b. decrease interest rates. c. mean the supply of loanable funds would move to the right. d. most likely decrease savings in the economy.
What are two monetary policies that could be implemented by the central bank which would have the same impact as unemployment benefits? Which policy above including unemployment benefits would be most effective in boosting the economy due to a decrease in economic activity
When nominal interest rates have hit the zero lower bound, can central banks affect the interest rates? Select one: OA. Yes: since the zero lower bound applies to nominal rates, not real rates, and it is real rates that are relevant for investment decisions. OB. No: once the zero lower bound is hit, central banks can no longer employ interest rates to stimulate economic activity. OC. Yes, but the mechanism by which central banks manipulate the interest rates that matter for spending must deviate from the banks' traditional method. OD. A and C.
If the Fed buys loans from banks, what is the impact on the Loanable Funds Market? A) Decreases the supply of loanable funds and lowers the interest rate. B) Increases the supply of loanable funds and lowers the interest rate. C) Decreases the supply of loanable funds and raises the interest rate. D) Increases the supply of loanable funds and raises the interest rate.
For each of the following monetary policy tools:A. The BSP buys securities in the open market.B. The BSP sells foreign exchange currentC. The BSP increases the reserve requirement ratio.D. The BSP applies its moral suasion ability requesting commercial banks to lowerdown interest rates.E. The government decided to deposit funds at the BSP.1. Determine whether the monetary tool imposed by the BSP is an expansionary or acontractionary policy.
3. Changes in discretionary fiscal policy (e.g., taxes) and automatic stabilizers (e.g., unemployment insurance benefits) can have significant unintended effects on all of the following except the incentive to spend. the incentive to save. the incentive to work. the incentive to purchase imported goods. TOSHIBA
There has been concerns among businesses that the recent reductions in the NIPR has not led to significant decreases in bank lending rates. What do you think could be accounting for this? What additional measures can policy-makers undertake to reduce the Cost of borrowing in the country?
If the bank decides to cut down on interest expenses by reducing its dependence upon borrowed funds, what policy must the bank follow?
3. Open market operations versus discount loans Consider an expansionary open market operation. Suppose the Federal Reserve buys government securities from the nonbank public. Suppose that the sellers of government securities cash the checks and hold on to the cash. Then, ceteris paribus, bank reserves do not change ▼ currency in circulation increases , and thus the monetary base will increase Suppose now that the Federal Reserve wants to increase the monetary base by increasing bank reserves only. Which of the following actions enables the Fed to achieve its goal? ○ Lend to commercial banks through the term auction facility Lend to the non-banking public at the discount window Require the non-banking public to repay discount loans Buy the government securities exclusively from the non-banking public By lending to commercial banks through the discount window, the Federal Reserve alters the monetary base and thus affects