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ECON 1101 Winter 2023 Assignment 7: Monetary Policy The work in this assignment requires answers from previous levels. This assignment will not be graded on
ECON 1101 Winter 2023 Assignment 7: Monetary Policy The work in this assignment requires answers from previous levels. This assignment will not be graded on whether or not the previous levels were correct. Therefore, if you do not do the previous levels, then simply choose an answer for the following and go from there. In Level 10, Spamalot had a(an) GDP gap. In Level 11, Spamalot had a target nserve mtio of 1. (10 points) Based on the GDP gap identified above, what could be used to close the gap (Circle One): Expansionary Monetary Policy Contractionary Monetary Policy Explain how monetary policy can be used to close the gap identified above. Draw the gap on the AD / AS graph. Show on the graphs how the gap is closed and explain the process in words. (9 points)2. ( 10 points) Suppose that Spamalot changes the current target reserve ratio to 15%. 1. Has the target reserve ratio increased or decreased? (1) 2. What will this do to the money supply? Why? (a) 3. According to Keynesian monetary policy, when would this be appropriate? What goal of Keynesian monetary policy would it help achieve? (?) A. According to Canadian monetary policy, when would this be appropriate? What goal of Canadian monetary policy would this help achieve? (2) 5. According to Monetarist monetary policy, when would this be appropriate? What goal of Monetarist monetary policy would this help achieve? (2) 2
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