Section 4 Study Questions (12.0 points) Answer each question fully. Complete sentences are not necessary. Lesson 1 (3.0 points) 1. What is a money market account? (0.5 points) A money market account invests your money in low risk investments with predictable interest rates.
How is the long-run aggregate supply curve related to the long run Phillips curve? 2. a. Distinguish between monetary policy instruments and monetary policy tools. (5 marks) b. Describe any two key tools of monetary policy, and describe how they would be used to implement expansionary monetary
(0.5 points) tells you when and how you're able to remove money from the account. 3. What is simple interest? (0.5 points) is interest gained only on the principal amount of an account. 4.
c. U.S. Treasury bills. d. Banker’s acceptances. e. Money market mutual funds27. Money markets are markets for
It achieves this through a process known as the transmission mechanism, which occurs in a number of distinct stages: - Purchasing and sale of government bonds in the STMM to influence the cash rate - Changes in the cash rate influence other interest rates, particularly short term securities, such as bank bills. In this way, changes in monetary policy are usually translated into the rates that banks charge for lending. - These lending rates then influence the decisions of businesses and household to borrow and spend, as seen in Figure 1, providing a key channel for transmitting monetary policy to the real economy. 3. Explain the possible impacts of loose monetary policy on the value of the exchange rate and on economic growth in Australia The effect of an expansionary monetary policy is to lower the exchange rate, weaken the financial
Macroeconomics, 8e (Parkin) Testbank 1 Chapter 9 Money, the Price Level, and Inflation 9.1 What is Money? 1) The functions of money are A) medium of exchange and the ability to buy goods and services. B) medium of exchange, unit of account, and means of payment. C) pricing, contracts, and means of payment. D) medium of exchange, unit of account, and store of value.
Explain how monetary policy can raise the level of aggregate demand in the short run. Dicuss the relevance of your answer for the UK since 2009. Monetary policy is the government or the central bank takes measures to influence the economic activities, especially refers to control of money supply , regulation of interest rate and some other control measures(Michael Woodford,2009). The central bank uses a series of measures, such as regulation of money supply, interest rates and the degree of the supply of credit in economic, to impact on total demand indirectly. At last, achieve aggregate demand and aggregate supply to be an ideal balance.
A1 of 3 Formulas involved on the WACC calculations Corporate Finance - MBA 2009 Note written by Prof. Carles Vergara-Alert & Prof. Pedro Saffi 1 Objective This note tries to clarify the different assumptions and formulas used to calculate the Weighted Average Cost Of Capital (WACC) that you will find in different textbooks and articles. 2 The WACC formula The WACC formula is a weigthed average of the cost of equity and the after-tax cost of debt: W ACC = E D+E RE + D D+E (1 − τ )RD (1) being RE the cost of equity, RD the cost of debt, τ the corporate tax, E the market value of the firm’s equity, and D the market value of the firm’s debt. Note that sometimes we call V to the sum of D and E, therefore, V = D + E. Sometimes, not all the financing is provided by debt and equity. As an example, let us assume that some financing is provided by preferred stock as well as equity and debt. The WACC formula has to be modified to include the main sources of long-term financing of the firm such as preferred stock: W ACC = E D P RE + (1 − τ )RD + RP D+E+P D+E+P D+E+P where RP is the cost of preferred stock and P is the market value of the firm’s preferred stock.
Monetary and Fiscal policy What is the difference between fiscal and monetary policy? Monetary policy is typically implemented by the central bank, and refers to actions which influence the availability and cost of money and credit, as a means of helping to promote economic growth and price stability. Tools of monetary policy include open market operations, the discount rate and reserve requirements. Fiscal policy decisions are set by the national government, and include decisions about the amount of money it spends and collects in taxes to achieve full employment and a non-inflationary economy. However, both monetary and fiscal policy may be used to influence the performance of the economy in the short run.
Financial Markets and Institutions, 8e (Mishkin) Chapter 2 Overview of the Financial System 2.1 Multiple Choice 1) Every financial market performs the following function: A) It determines the level of interest rates. B) It allows common stock to be traded. C) It allows loans to be made. D) It channels funds from lenders-savers to borrowers-spenders. Answer: D Topic: Chapter 2.1 Function of Financial Markets Question Status: Previous Edition 2) Financial markets have the basic function of A) bringing together people with funds to lend and people who want to borrow funds.