Study Session 6 Quiz following, question, control, policy, cover

adehbone

Under what monetary and fiscal policies do you get the following:

1) Upward sloping yield curve
2) Downward sloping yield curve
3) Flat yield curve

And the bonus question. Which part of the yield curve does monetary policy control and which part does fiscal policy cover

PalacioHill

1 - both expansive
2 - both contrative
3 - monetary contractive, fiscal expansive

Monetary - ST, fiscal LT

justin88

ST - Monetary
LT - Fiscal

Hence

1) Expansive Monetary (keep IR low) and Expansive Fiscal (Borrow more driving up LT rates)
2) Contractive Monetary (high IR) and Contractive Fiscal (borrow less so keep long end rates down)
3) ...... guess....... fiscal and monetary opposite?

@Kabaka - why did you say Contractive and Expansive for number 3?
what would the opposite - an expansive monetary and constrictive fiscal look like in your opinion?

wake2000

All from memory:

1. Loose, Loose
2. Restrictive, Restrictive
3. Restrictive, Loose

Fiscal - short end, Monetary - long end

Disclaimer: 1 and 2 may be reversed, not sure

NO EXCUSES