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Homework answers / question archive / 1)If the Federal Open Market Committee (FOMC) decided to try to use expansionary monetary policy to stimulate GDP growth, what would they do? (you can answer this question in a few words)
1)If the Federal Open Market Committee (FOMC) decided to try to use expansionary monetary policy to stimulate GDP growth, what would they do? (you can answer this question in a few words).
2)If the Federal Open Market Committee used one of its tools to increase the money supply in the U.S., explain how that is intended to stimulate the economy? (Which curve is intended to shift to the right - Aggregate Demand or Aggregate Supply? Why would it shift to the right?)
1)Expansionary monetray policy is when the Fed incresaes the money supply to increase demnad .The Fed increases the money supply which lowers interest rate and increases demand.This increases the GDP and boosts growth in the economy.This lowers the value of the currency and decreases the exchange rate.
2)In order to stimulate the economy , the Fed uses its tools to stimulate the economy .That increases the money supply , lowers interest rate ,and increases demand .This stimulates economic growth . The aggregate demand curve shifts to the right as lower interest rate increases demand
