Macroeconomics Answers

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

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

“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 the inverse relationship between bond price and interest rates.

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

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

How does the money supply change as a result of (a) an increase in the discount rate, (b) an open market purchase, (c) an increase in the required reserve ratio?

Bank A has $1.2 million in reserves and $10 million in deposits. The required-reserve ratio is 10%. If Bank A loses $200,000 in reserves, by what dollar amount is it reserves deficient?

If individuals remove funds from their checkable deposits and transfer them to their money market accounts, will M1 fall and M2 rise? Explain.

The Nottinghamshire Research Observatory in England calculated that students who attend Nottingham Technical University spend about £2,760 each in the local economy for a total of £50.45 million. In total, the impact of their spending on the local economy is £63 million. Calculate the size of the student spending multiplier.