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hrome File Edit View History Bookmarks People Window Help py Coursework-Take T. ×?G which monetary poli D x Chapter-23, 5th ed, p M MHE Reader x C O ? secure https://compass.centralmethodist.edu/ICS/Academics/EC/EC311-EX17/EXSU2 apter 23 Quiz in Week 8 Scored out of: 20 Points Length 10 questions | Time limit: ?Exitthis Quiz 30 minutes Time Remaining: 26 minutes Save Progress Last Saved: 7:30 PM None of the above (2pts) Which monetary policy transmission mechanism is associated with the idea that when interest rates rise, the quantity of aggregate output demanded falls? 3) ? bank lending firm's balance sheets O asset prices All of the above None of the above 4) According to the textbook, the proper policy for dealing with asset price bubbles (2ps) is to O wait until ther bubble bursts and tyhe try to clean up the mess use traditional monetary policy to "lean against the bubbles." use traditional monetary policy to prevent bubbles from forming in the first O place. use macroprudential regulatory tools instead of traditional monetray policy (2pts) 5) The bank-lending channel of monetary policy focuses Slide 10 o English (United States)

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3) C. All of the above

Bank lending,firm,s balance sheet and asset price are monetary transmission mechanism associated with idea that with increase in interest rate,the quantity of aggregate output demand falls.So that aggregate demand curve slopes down.The transmission mechanism in bank lending that when there is ease in monetary policy it raises the level of bank reserves and deposits which further increase supply of funds.In case of balance sheet of firm transmission mechanism is when lower interest rate raise firms profits which increase there net worth and reduces problem of adverse selction and moral hazard.In case of asset prices higher stock prices and real estate vale increase investment and consumption.

4) D.use macroprudential regulatory tools instead of traditional monetary policy

Asset price bubble is when the price of an asset rise quickly over a short period of time.The main three causes are due to lower interest rates,demand -pull inflation and supply shortage lead to asset bubble.So proper policy to deal with asset price bubble is use macroprudential regualtory tools instead of traditional monetary policy or waiting bubble to burst.Bubbles are major threat when associated with expansion of credit that makes finacial system to collapse.It helps to avoid option of tightening interest rate when asset price bubbles.

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