Trace the cause-effect chain that results from a restrictive monetary policy.
What will be an ideal response?
A restrictive monetary policy will cause bank reserves to decline and the money supply to decrease. Interest rates will rise and this discourages investment spending. Real GDP will fall by a multiple of the decline in investment.
Economics
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If the U.S. dollar depreciates against the yen below the targeted exchange rate, the U.S. Federal Reserve has to intervene in the foreign exchange market such that:
a. the U.S. demand for yen rises. b. the supply of U.S. dollars rises. c. U.S. exports to Japan fall. d. the U.S. dollar is devalued. e. the supply of U.S. dollars falls.
Economics
The institution that sets the nation's monetary policy is called the
Economics