Fed primary goal is to cure inflation

Assignment Help Macroeconomics
Reference no: EM133311634

Assume that the Fed's primary goal is to cure inflation. How can it use open market operations to achieve its goal? What is a possible adverse effect of this action by the Fed.

to Cure inflation, the Fed may use a restrictive monetary policy which will reduce economic growth and inflationary pressure. A possible adverse effect is an increase in the unemployment rate. Show your work by using IS-LM framework. Discuss in detail the repercussion of this on the different economic variables such as GDP, Price level, consumption, investment.

Reference no: EM133311634

Questions Cloud

Aggregate demand has four components : Aggregate demand has four components: consumption spending, investment spending, government spending (G), and Net Export
Explanation of each type of healthcare system : Explanation of each type of healthcare system Identify and explain at least two advantages of each system Identify and explain at least two disadvantages
What is the marginal product of capital : In the initial steady state, what is the marginal product of capital. What will the capital-output ratio be at the Golden Rule steady state
Define the term subsidy as it relates to the farm bill : Define the term subsidy as it relates to the Farm Bill. Which crops receive most of the subsidies? List at least two positive things and two negative things
Fed primary goal is to cure inflation : Assume that Fed's primary goal is to cure inflation. How can it use open market operations to achieve its goal? What is possible adverse effect of this action
Provide a description of each issue to children : Written meal plan with snacks -Breakfast -Lunch -Dinner -After School Snacks on Soccer Days -Snacks during the day and before bed
Sustainable energy systems and climate changes : EGR9014M Sustainable Energy Systems and Climate Changes - University of Lincoln - Analyse the advantages and disadvantages of unconventional sources of energy
Explain the roles of iron and copper and recall their dris : What foods should Joan include in her diet that would be good sources of iron and copper, two minerals involved in helping to prevent anemia?
Economy of microland is expanding rabidly : Suppose that the economy of Microland is expanding rabidly. Due to this rapid expansion, the Federal Reserve Bank is pursuing a contractionary monetary policy.

Reviews

Write a Review

Macroeconomics Questions & Answers

  What economic arguments would you have presented to the doj

In 2008, the DOJ decided not to challenge a merge, and 160;these two firms united become Sirius XM. If you were an economic consultant for 160;Sirius, what economic arguments would you have presented to the DOJ to persuade

  Identify growth in output per capita

Identify growth in output per capita and in population growth - Is it an open or closed economy and identify its comparative advantage and whether it is involved in trade.

  What is the government present-value budget constraint

Assume that there are 1,000 identical consumers and the equilibrium real interest rate is 20%. What is the government present-value budget constraint

  Borrowings and open market purchases

Recently, a troubled bank borrowed $800 million from the Federal Reserve. Describe the impact this event had on the monetary base.

  What are the advantages of business trips

What are the advantages/disadvantages of business trips? What advice do you have for somebody traveling for business? Do you go on business trips at work?

  What is the value of the money multiplier

Compute the level of money supply necessary to attain these values of P and Y. If the money multiplier is 10, how large an open market purchase or sale must the Fed conduct?

  Does a change in an interest rate indicate that a change in

Identify & describe two different roles that interest rates play in the economy. Does a change in an interest rate indicate that a change in some part of the economy is occurring? Explain.

  Costs and diminishing marginal returns

Use the following Information on a hypothetical short-run production function to answer questions a-c. Calculate the marginal and average variable product of each unit of labour input.

  Discuss the optimal method for procuring a modest number

Discuss the optimal method for procuring a modest number of standardized inputs that are sold by many firms in the marketplace. What are the promary advantages and disadvantages of using this method to acquire inputs?

  Problem regarding the four cognitive theories

Briefly discuss each of the four cognitive theories, and explain how each of these theories can explain employee behavior.

  Focusing on maximizing revenue

A firm has just introduced a product in a market and would like to increase its market share by focusing on maximizing revenue in the current period. It has estimated that the demand for the product is Q = 1,500 - 75 P. Then to maximize revenue, t..

  Why marginal cost pricing forever as punishment strategy

Suppose that there are three firms, who produce homogeneous products, and whom have the same marginal cost which is constant over output. These firms play an infinitely repeated Bertrand pricing game. Each period they simultaneously set prices.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd