Fiscal policy can be used to: combat inflation. reduce unemployment. O eliminate
ID: 2441639 • Letter: F
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Fiscal policy can be used to: combat inflation. reduce unemployment. O eliminate a GDP gap. 0 All the above. QUESTION 16 All else equal, if an economy is experiencing inflation due to an increse in Aggregate Demand, an appropriate monetary poli for the U.S. Federal Reserve to instruct Regional Federal Reserve Banks to: Osell bonds buy bonds O print money O lower mortgage interest rates QUESTION 17 Open Market Operations refers to O purchases of stocks in the New York Stock Exchange Othe purchase or sale of government securities such as bonds by 'the Fed. O central banks lending to commercial banks. the printing of money.Explanation / Answer
15. All the above.
Fiscal policy can be used for all the purposes given in the options.
16. sell bonds
Selling bonds will decrease the liquidity in market because people will invest the cash in buying the bonds.
17. the purchase or sale of government securities such as bonds by 'the Fed'.
18. sell bonds in Open Market Operations.
As AD curve shifts, the price level will increase because AS1 was already at full employment level. To decrease the inflation the liquidty in the market needs to be reduced by selling the bonds.
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