Chapter 13, Macroeconomic Policy Fundamentals Video Solutions, Introduction to agricultural economics

Problem 1

Fill in the blanks in the following table with the appropriate response: "lower" if the variable will decline in value as a result of the policy action or "raise" if the variable will increase in value as a result of the policy action.
(Figure can't copy)

A. Elizabeth Hildreth

Numerade Educator

01:38

Problem 2

Suppose the Federal Reserve buys $$\$ 4,000,000$$ in government securities from a depositor at the First
National Bank of North Zulch. Let's assume the person deposits this money in this bank. Further assume that the current reserve requirement ratio is $20 \%$.
a. Indicate here what will initially happen to this bank's balance sheet as a result of this transaction.
Change in reserves________________
Change in loans________________
Change in deposits________________
b. Indicate here what will eventually happen to the U.S. banking system as a result of this transaction.
Change in reserves________________
Change in loans________________
Change in deposits________________

Majid Borumand

Numerade Educator

07:01

Problem 3

Review the following graph and answer questions (a), (b), and (c).
(Figure can't copy)
a. If the full-employment level of output is $$\$ 4,000$$, is the economy depicted in an inflationary or a recessionary gap? What specific monetary policies would you recommend, if any, to correct this?
b. If the full-employment level of output is $$\$ 6,000$$, is the economy depicted in an inflationary or a recessionary gap? What specific monetary policies would you recommend, if any, to correct this?
c. If the full-employment level of ourput is $$\$ 5,000$$, is the economy depicted in an inflationary or a recessionary gap? What specific monetary policies would you recommend, if any, to correct this?

Crystal Wang

Numerade Educator

01:59

Problem 4

Place a $\mathrm{T}$ or $\mathrm{F}$ in the blank appearing next to each statement.
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a. ____________ Only a small level of inflation occurs as the economy moves from $A D_1$ to $A D_2$.
b. ____________ A tax cut represents one approach to reducing prices below $P_2$.
c. ____________ This graph depicts the effects of stagflation.

Banhishikha Sinha

Numerade Educator

02:03

Problem 5

Review this graph and answer questions (a), (b), and (c).
a. If the full-employment level of output is $$\$ 6,000$$, is the economy in an inflationary or a recessionary gap? What specific fiscal policies could be used to correct this?
b. If the full-employment level of output is $$\$ 4,000$$, is the economy in an inflationary or a recessionary gap? What specific fiscal policies could be used to correct this?
c. If the full-employment level of output is $$\$ 5,000$$, is the economy in an inflationary or a recessionary gap? What specific fiscal policies could be used to correct this?

Brandon Miskanic

Numerade Educator

03:02

Problem 6

Given the following figure, explain what type of inflation is taking place and the specific fiscal and monetary policies that may be used to combat this type of inflation if, during a period of years, the economy moves from $A D_1$ to $A D_4$.
(Figure can't copy)

Lindsay Bur

Numerade Educator

03:05

Problem 7

Complete the following table describing the short-run effects of specific macroeconomic policy actions with $\mathrm{a}^{-}+$" denoting an increase in the variable in each column heading and a "-" denoting a decrease ( 20 points; 1 point each).
(Figure can't copy)

Tommy Nguyen

Numerade Educator

09:30

Problem 8

Given the following demand and supply equation for a market, answer the following questions:
$$
\begin{aligned}
& M_S=1 / r_w(\mathrm{TR}) \\
& M_D=45-125(i)+1.0(Y) \\
& M_S \equiv M_D
\end{aligned}
$$
where $i$ represents the rate of interest, $Y$ represents national income, $\pi_m$ represents the fractional reserve requirement ratio, and $\mathrm{TR}$ represents total reserves.
Assume national income in 2015 was $$\$ 1,200$$ and is projected to be $5 \%$ higher in 2016. Also, assume the reserve requirement ratio is 0.25 and total reserves are equal to 140 .
a. What market clearing interest rate would you project for 2016?
b. What level of the money supply would be needed to achieve an interest rate of $8.5 \%$ in 2016

Jennifer Stoner

Numerade Educator

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Problem 9

Automatic fiscal policy instruments include
a. policy that requires specific policy actions.
b. such instruments as actions to eliminate a recessionary or contractionary gap in the economy.
c. instruments such as Congressional appropriations in the years when a drought or other natural disasters occur.
d. none of the above.

Rashmi Sinha

Numerade Educator

Problem 10

The rate of inflation in the economy will be highest in the ____________ range of the aggregate supply curve.

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01:08

Problem 11

The three major types of monetary policy instruments are ____________, ____________, and ____________.

Majid Borumand

Numerade Educator

01:35

Problem 12

The money multiplier is equal to the ____________ of the fractional reserve requirement ratio.

David Gagnon

Numerade Educator

01:23

Problem 13

A fiduciary monetary system is based on the fact that each dollar of currency in the money supply may be redeemed for an equal amount of gold or silver at the request of the currency holder. T $\mathbf{F}$

Jennifer Stoner

Numerade Educator

01:04

Problem 14

By decreasing the discount rate, the Federal Reserve can increase the demand for money. T F

Kaylee Mcclellan

Numerade Educator

Problem 15

Lowering the fractional reserve requirement ratio is an example of
a. contractionary fiscal policy.
b. expansionary monetary policy.
c. expansionary fiscal policy.
d. none of the above.

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Problem 16

Expansionary monetary policy would likely
a. increase farmland prices.
b. increase export demand for agricultural commodities.
c. increase net farm income.
d. all of the above.

Rashmi Sinha

Numerade Educator