Purchase Solution

Effects of monetary and fiscal policy on inflation

Not what you're looking for?

Ask Custom Question

1.If the market price is less than the equilibrium price, what is the relationship of quantity supplied to quantity demanded? What will happen to the price?

2. If the market price is greater than the equilibrium price, what will be created in the market, and what will happen to the price?

3. What is the final impact of contractionary fiscal policy on the price-level and real output?

4. What is the final impact of expansionary fiscal policy on the price-level and real output?

5.What are the impacts of a tight monetary policy on the price-level and real output? When would a tight monetary policy be appropriate?

6. What are the impacts of an easy monetary policy on the price-level and real output? When would an easy monetary policy be appropriate?

Purchase this Solution
Solution Summary

Market equilibrium, impact of fiscal and monetary policy

Solution Preview

1.If the market price is less than the equilibrium price, buyers will want to purchase more of the good than suppliers are willing to produce. There will be a shortage, and buyers will begin to bid against each other in order to obtain the good. The price will eventually rise to the equilibrium price.

2. If the market price is greater than the equilibrium price, a surplus ...

Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

View More Free Quizzes
Related BrainMass Solutions

  • Inflation and Monetary Policy

    On the other hand, monetary policy is also another tool to curb the adverse effects of inflation but, this time, through affecting the money supply available in circulation. Inflation and monetary policy is examined.

  • Should the Federal Reserve only focus on inflation?

    266488 Should the Federal Reserve only focus on inflation? The role of fiscal policy is stabilizing the economy "Should the FED focus on only inflation"? This has been an ongoing debate in monetary policy.

  • Effects of contractionary fiscal policy

    434476 Effects of Contractionary Fiscal Policy Explain what effect a contractionary fiscal policy have on the price level and real GDP, starting from full employment equilibrium?

  • Policy Options For The Economy

    What are the possible negative side effects of your recommendations. The two policy options are monetary policy and fiscal policy. The economy is in a recession, with a negative growth rate and a high unemployment rate.

  • AD/AS as a framework for fiscal and monetary policies

    Contractionary fiscal policies would shift it to the left by an initial amount then further depending on the multiplier In this exercise I examine the effects of fiscal and monetary policy on equilibrium output and price (inflation) using the AD/AS

  • Discuss expansionary and contractionary monetary policies.

    When the economy is at AD'' a tight monetary policy can reduce inflation and only cause a modest decrease in output and increase in unemployment. The following provides a discussion of monetary policy, how it is used, implemented, and modeled.

  • GDP: Fiscal and Monetary Policy

    These will reduce money in circulation and will help tame inflation. 3. Both monetary policy and fiscal policy encounter the problems of lags.

  • Federal Reserve and Inflation

    Best of luck on your assignment and thank you for using BrainMass. Analysis of articles related to monetary policy and inflation

  • Relation Between Fiscal and Monetary Policy

    Whenever fiscal policy makers increase the budget deficit, monetary policy makers should increase the money supply in order to maintain a low, stable rate of inflation.

  • How do changes in supply and demand affect interest rates?

    Give an example of how fiscal and monetary policies compliment or work against each other? Both monetary policy and fiscal policy can complement each other in areas such as controlling inflation.

View More Related Solutions