A2. What is the basic objective of monetary policy? What are the major strengths of monetary policy? Why is monetary policy easier to conduct than fiscal policy?

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Trinidad TremblayLv2

30 Mar 2018

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QUESTION SET A A1. Why do national income accountants compare the market value of the total outputs in various years rather than actual physical volumes of production? What problem is posed by any comparison over time of the market values of various total outputs? How is this problem resolved? A2. What is the basic objective of monetary policy? What are the major strengths of monetary policy? Why is monetary policy easier to conduct than fiscal policy? A3. Explain why a single commercial bank can safely lend only an amount equal to its excess reserves but the commercial banking system as a whole can lend by a multiple of its excess reserves. What is the monetary multiplier, and how does it relate to the reserve ratio?

Fiscal Policy and Monetary Policy - which one is easier to execute and why--which one is faster to executed and why

One of the strengths of monetary policy relative to fiscal policy is that monetary policy:

a. has a larger multiplier effect.

b. is subject to closer political scrutiny.

c. produces an offsetting net export effect.

d. can be implemented more quickly.