Questions:
1. Would export businesses prefer an increasing or failing dollar? Would it be the same for a European tourist on the budget and visiting the Grand Canyon? Elucidate your answer.
2. What are four ways that the FED can employ to generate money? What are the most powerful one and what technique the FED to create a gradual easing of the money supply either created or destroyed most often uses?
3. What is the meaning of following: a stock option price, strike price and what are a put and a call? What are the demerits or merits of purchasing stock options over stocks? What function do Mutual Funds play with Stock Market investments?
4. What is the differentiation between the discount rate, prime rate and subprime rates of interest? Which interest rate in particular created the 2008 recession? Explain how that happened.
5. What is the differentiation between the FED targeting the interest rate vs. inflation and which one is Bernanke using today? Name a few countries that use this technique today.
6. Give a short history of how banking evolved in a sophisticated operation. Start first with the Goldsmith and sum up with the Banking system that we experience today.
7. Throughout the 1980 period, what did the FED Chairman Paul Volcker do to decrease double digit inflation of the 1970’s? What was the name of the person and or the economic school’s approach that Volcker used?
8. Write down the relationship between the interest rate and bond prices? Is there any difference between T-Bills vs. Corporate bonds in reaching your assessment? When the stock market falls, where do you suppose that most investor place their money and why?
9. How does the FED employ the bond market to create and destroy money? Which technique do developed countries employ to reduce the chance of experiencing inflation? What about Banana Republicans and inflation, do they have this means available to them?