High Unemployment Leads to Worry over Economic Growth""Fed Chairman: Expect a Rate Decrease Soon""Sales of Treasury Bonds Decreasing"What monetary policy strategy of the Federal Reserve do these headlines reflect?A.Making taxes more progressive in order to increase government revenuesB.Educating people about good habits for managing their moneyC.Encouraging business growth by putting more money into circulationD.Expanding government spending to give more money to consumersSUBMITarrow_backPREVIOUS
Question
High Unemployment Leads to Worry over Economic Growth""Fed Chairman: Expect a Rate Decrease Soon""Sales of Treasury Bonds Decreasing"What monetary policy strategy of the Federal Reserve do these headlines reflect?A.Making taxes more progressive in order to increase government revenuesB.Educating people about good habits for managing their moneyC.Encouraging business growth by putting more money into circulationD.Expanding government spending to give more money to consumersSUBMITarrow_backPREVIOUS
Solution
These headlines reflect the monetary policy strategy of the Federal Reserve of "Encouraging business growth by putting more money into circulation".
Here's why:
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"High Unemployment Leads to Worry over Economic Growth": This headline suggests that the economy is not doing well, as high unemployment usually indicates a struggling economy.
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"Fed Chairman: Expect a Rate Decrease Soon": This headline suggests that the Federal Reserve is planning to lower interest rates. Lowering interest rates is a common strategy used by the Federal Reserve to stimulate economic growth. When interest rates are lower, it's cheaper for businesses to borrow money, which they can then invest in their business to grow and expand.
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"Sales of Treasury Bonds Decreasing": This headline suggests that the government is selling fewer Treasury bonds. When the government sells bonds, it's essentially borrowing money from the public. If it's selling fewer bonds, that means it's borrowing less money, which means there's more money left in circulation for businesses and individuals to use.
So, all these headlines together suggest that the Federal Reserve is trying to stimulate economic growth by making it easier and cheaper for businesses to borrow money, which they can then use to grow and expand their businesses. This is essentially the strategy of "Encouraging business growth by putting more money into circulation".
Similar Questions
"Economy Contracting, Experts Report""Fed Announces Decrease in Interest Rates""Banks Request Lowered Reserve Ratio"What monetary policy strategy of the Federal Reserve do these headlines reflect?A.Restricting overnight loans in order to regulate banksB.Expanding government spending to give more money to consumersC.Increasing the money supply to spur economic growthD.Lowering taxes to stimulate the economySUBMITarrow_backPREVIOUS
What should the Fed do if its objective is to reduce unemployment rate (assuming ample reserves)?(Note: You need to choose the most effective tool that the Fed can directly control.)Group of answer choicesReduce the discount rate.Increase the discount rate.Reduce the interest on discount bonds.Conduct an open market purchase.Conduct an open market sale.Reduce the interest on reserves.Increase the interest on reserves..
The Federal Reserve would most likely adopt an expansionary monetary policy in which economic situation?A.The country has a high unemployment rate and slow economic growth.B.The country has a low unemployment rate and steady economic growth.C.The country has a high inflation rate and rapid economic growth.D.The country has a low inflation rate and strong economic growth.
8. If the central bank pursues a monetary policy that is more expansionary than what firms and people expect, then the central bank must be trying to A) boost output in the short run. B) constrain output in the short run. C) constrain prices. D) boost prices in the short run. 9. High unemployment is undesirable because it A) results in a loss of output. B) always increases inflation. C) always increases interest rates. D) reduces idle resources. 10. Supply-side economic policies seek to A) raise interest rates through contractionary monetary policy. B) increase federal government expenditures. C) increase consumption expenditures by increasing taxes. D) increase saving and investment using tax incentives.
The implementation of a contractionary policy by the Federal Reserve would result in:Question 3Answera.increased spendingb.increased economic growthc.lower interest ratesd.lower unemploymente.lower inflation
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