If instead the fed wants to stabilize aggregate demand how, Ask an Expert

Economics

Suppose a computer virus disables the nation's automatic teller machines , making withdrawals from bank accounts less convenient. As a result, people want to keep more cash on hand, increasing the demand for money.

A. Assume the Fed does not change the money supply. According to the theory of liquidity preference, what happens to the interest rate? What happens to aggregate demand?

B. If instead the Fed wants to stabilize aggregate demand, how should it change the money supply?

C. If it wants to accomplish this change in the money supply using open-market operations, what should it do?

View complete question

Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M947207

Have any Question?Write your Review or question?

Related Questions in Microeconomics

Question american government questions1 american do not

Question: American government Questions: 1. American do not vote on -----. A) ballot initiatives (B) Mayoral electios (C) national elections (D) voter referendums 2. In 1914, the supreme court probhited federal courts fr ...

Question steven has been your best friend since grade

Question: Steven has been your best friend since grade school. You have decided to quit your jobs and start up a bakery together since you both love bread. He insists he wants to start the business as a partnership. You ...

Question corporate directors are either insiders who hold

Question: Corporate directors are either insiders who hold (or have held) important positions within the company or outsiders who have achieved distinction elsewhere. a. Why do you as a shareholder probably prefer that t ...

Question explain verbally and analytically using a factor

Question: Explain, verbally and analytically using a 'Factor Specific' Model, why it is that owners of flexible factors are more likely to benefit form trade than the owners of factors that are fixed to one type of produ ...

Question consider an economy with the representative

Question: Consider an economy with the representative consumer, representative firm, and government. Suppose that G = 12. The consumer's preferences over the consumption good and leisure are given by the utility function ...

Question why are the themes of managing teams managing the

Question: Why are the themes of managing teams, managing the multicultural workforce, managingglobalization, managing ethics and CSR, and managing with metrics so important today? Which of these challenges is likely to i ...

Question in an effort to stop the migration of many of the

Question: In an effort to stop the migration of many of the automobile manufacturing facilities from the Detroit area, Detroit's city council is considering passing a law that would give investment tax credits to auto ma ...

Question a government passes a family-friendly law that no

Question: A government passes a family-friendly law that no companies can have evening, nighttime, or weekend hours, so that everyone can be home with their families during these times. Analyze the effect of this law usi ...

Question what are the major differences in translating

Question: What are the major differences in translating liabilities between the current rate method and the temporal method? The response must be typed, single spaced, must be in times new roman font (size 12) and must f ...

Question a newspaper headline reads state officials take on

Question: A newspaper headline reads: "State Officials Take on Pricing Regulations to Try to Provide Better, Dependable Income to Dairy Farmers." Is providing dependable income to dairy farmers a good policy goal for gov ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Microeconomics Expert