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Question 1. Describe three ways in which the Federal Reserve can change the money supply.
In principle, could the federal reserve conduct monetary policy through the purchase and sale of stocks on the New York stock exchange?
Assume 3% is the Yf (full employment) growth rate for the real GDP and the real SHORT TERM interest rate (r) is constant at 1%.
What are the risks to other macroeconomic measures such as real GDP and unemployment? How can the monetary authority mitigate these risks?
The Federal Reserve has traditionally conducted open market operations through the purchase and sale of government bonds.
Summarize and critique a recent article or editorial piece on monetary policy from a major newspaper, magazine, or website.
Suppose the Federal Reserve purchased gold or foreign currency. How would this purchase affect the domestic money supply?
What is the stated direction of recent monetary policy? What policy actions have the Federal Reserve taken to confirm that direction?
What do you think of the effectiveness of US's monetary policy over the past three years, including the frustrating years of 2001-2002?
Considering the long time lags of monetary and fiscal policies, what if the economy needs a boost today, how would this be accomplished quickly and effectively?
Besides tradeoffs of too much stimulation and devalued dollar with negative ramifications, are there any other tradeoffs?
If a nation desires to have stable prices (or low inflation), why not simply pass a law that prohibits firms from changing prices?
Oil and its effect on the economy - With rising oil/energy prices today, how is it affecting the economy?
Should the Fed increase or decrease the money supply?
Question: Do you think the current Fed monetary policies are effective?
Suppose the Fed decides it needs to pursue an expansionary policy. Assume people hold no cash, the reserve requirement is 20%, and there are no excess reserves.
What is the ultimate change in demand deposits in the entire banking system?
If the Federal Reserve were to engage in an activist stabilization policy, in which direction should they move the money supply in response to the following:
How would a fall in U.S. interest rates affect Canadian investment, saving, net foreign investment, and the Canadian real exchange rate?
Could the Federal Reserve conduct monetary policy through the purchase and sale of stocks on the New York Stock Exchange?
Some economists believe that the Federal Reserve should follow strict rules for the conduct of monetary policy.
While Keynes revolutionized economic thinking in the 1930s, his theories were subsequently eclipsed by new ideas such as monetarism and supply- side.
Employee innovation and productivity achievements are rewarded with certificates or token prizes. Are these rewards appropriate?