Macroeconomics Answers

What is the different between the federal funds rate and the discount rate?

If bank A borrows $10 million from the Fed, what happens to the reserves in bank A? in the banking system?

“According to the Keynesian transmission mechanism, as the money supply rises, there is a direct impact on the goods and services market.” Do you agree or disagree with this statement? Explain your answer.

Explain how the monetarist transmission mechanism works when the money supply rises.

Why are Keynesian more likely to advocate expansionary monetary policy to eliminate a recessionary gap than concretionary monetary policy to eliminate an inflationary gap?

If the economy is stuck in a recessionary gap, does this make the case for activist (expansionary) monetary policy stronger or weaker? Explain your answer.

What is the inflationary gap? the output gap?

Would a rules-based monetary policy produce price stability?

If the economy is stuck in a recessionary gap, does this make the case for activist (expansionary) monetary policy stronger or weaker? Explain your answer.

How might monetary policy destabilize the economy?