Question about monetary authority

Assignment Help Macroeconomics
Reference no: EM1369933

If the monetary authority wants to stimulate an economy in a recession, it often reduces interest rates, and if the inflation rate is low, as it has been in the early part of the current decade, these interest rates can become very low. How effective is this monetary policy if the demand for loans is shrinking, even at a very low interest rate? Why would demand for loans decline if interest rates are declining?

Reference no: EM1369933

Questions Cloud

Supply and demand graphs : Can you illustrate through using supply and demand graphs what happens to the equilibrium price and quantity in each of the following conditions.
Question related to training costs : What are the potential costs to this lack or training and What type of training would you recommend: OJT, classroom, or a combination
Program which accepts candy name-price per pound : A program which accepts the candy name (for example, "chocolate-covered cherries"), price per pound, and number of pounds sol in average month, and displays item's data only if it is best-selling item.
Why do organizations use concurrent - utilization review : Find two challneges/problems/hurdles to using this process and in what circumstances would this type of review be ineffective/inappropriate
Question about monetary authority : If monetary authority wants to stimulate an economy in a recession, it often reduces interest rates, and if inflation rate is low, as it has been in the early part of current decade,
Write client and server java swing application using socket : Write client and server, Java Swing application using socket connections which permits the client to specify filename to server in Textfield and server send contents of text file back to client if it exists.
Business management solution : Describe what skills and knowledge are the focuses of the event and why these are important for managers - Business Management solution
Find maximum possible amount of money by optimal strategy : Removes it from row permanently, and receives value of coin. Find out the maximum possible amount of money we can definitely win if we move first.
Open market operations monetary policy : Assume that the federal reserve wishes to keep nominal interest rate at a target level of 5 percent. Draw a money supply and demand diagram in which the current equilibrium interest rate is 5%.

Reviews

Write a Review

 

Macroeconomics Questions & Answers

  Inflation targeting be a good policy

Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Describe the present economic crisis situation in europe

Describe the present economic crisis situation in Europe.  Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..

  Long-term federal government budget problems

Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.

  Derive and compare demand curve

Question based on Derive and compare demand curve,  Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

  Problem based on utility function

Problem based on  Utility Function - Problem,  Answer and explain the following using a diagram which is completely labeled.

  Laffer curve : tax rate and tax revenue

Question based on Laffer Curve : Tax Rate and Tax Revenue,  Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?

  Problem - income elasticity of demand

Problem - Income Elasticity of Demand,  Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Affect of falling domestic investment on trade surplus and

How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

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