You are watching: Which of the following are arguments in favor of active stabilization policy by the government?
1.The Fed can successfully respond to too much pessimism by widening the money supply and lowering interest rates.2.Shifts in aggregate demand are regularly the result of tide of pessimism or optimism among consumers and also businesses.
Which of the adhering to statements around the dispute over stabilization plan are correct? examine all that apply.
1.Advocates of active stabilization policy think that the federal government can change monetary and also fiscal policy to counteract tide of too much optimism and also pessimism among consumers and businesses.2.Opponents of energetic stabilization policy believe that far-reaching time lags in both fiscal and monetary policy often exacerbate economic fluctuations.
After the rise in the price level, the quantity of money demanded at the initial interest rate of 9% will be_______t 보다 the quantity of money supplied by the Fed in ~ this interest rate. World will shot to___________ your money holdings. In order to perform so, people will_________ bonds and other interest-bearing assets, and bond issuers will discover that ________________ interest rates until the money industry reaches its new equilibrium in ~ an interest rate of________
The adjust in the interest price that you uncovered previously will reason residential and also business invest spending to______ , leading to__________ in the amount of calculation demanded in the economy.
Suppose the Fed announces that it is elevating its target interest price by 75 communication points, or 0.75 percent point. To execute this, the Fed will use open-market to work to_____________ the____________money by ____________ the public.
Suppose the complying with graph reflects the aggregate demand curve because that this economy. The Fed"s policy of targeting a higher interest rate will__________ the cost of borrowing, bring about residential and business investment spending to____________and the amount of calculation demanded to _________at each price level.
Consider a hypothetical closed economy in which families spend $0.60 that each extr dollar castle earn and also save the remaining $0.40.The marginal propensity come consume (MPC) because that this economic climate is________ , and also the spending multiplier because that this economic situation is__________
Suppose the federal government in this economy decides come increase federal government purchases by __________The increase in government purchases will certainly lead to boost in income, generating one initial change in consumption equal to_____________ This increases earnings yet again, bring about a 2nd change in intake equal to______________The total change in demand resulting indigenous the initial adjust in federal government spending is$1 sunshine Correct .
Suppose the for each one-percentage-point increase in the interest rate, the level of invest spending declines by $0.5 billion. The readjust in the interest rate (according come the change you made come the money market in the ahead scenario) therefore causes the level of investment spending of________ by___________
After the multiplier result is accounted for, the adjust in investment spending will reason the amount of output demanded to_____________ by$__________ at every price level. The influence of rise in government purchases top top the interest rate and the level of investment spending is recognized as the____________effect.
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Suppose the federal government decides to intervene to bring the economy back to the natural level of output by making use of _________policy
Suppose the in march the government undertakes the kind of policy that is crucial to bring the economy ago to the natural level that output provided in the ahead scenario. In July 2020, customer confidence decreases, causing a decrease in customer spending. Due to the fact that of the________associated v implementing monetary and fiscal policy, the influence of the government"s new policy will certainly likely________________________ once the results of the policy are completely realized.