Worksheet 6 - 1991 and 2001. Explain. 9. What actions has...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Introduction to Macroeconomics Econ 104a,c,d,e,f, - Spring 2010 Worksheet 6 – Monetary Policy 1. How does expansionary monetary policy affect the economy in theory? 2. What is Fiscal Policy? How does it affect the economy in theory? 3. Why did Keynes believe that Fiscal Policy was more powerful/effective than Monetary Policy? 4. What is the Liquidity Trap? Are we in one now? What does this mean for monetary policy? 5. How does Monetarism differ from Keynesian Monetary Policy? What are its basic arguments? 6. What is crowding out? Why is it an argument against Fiscal Policy and a part of Monetarism?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
7. When did Monetarists take over in terms of Monetary Policy? What led to this change? 8. Monetary Policy, and Alan Greenspan, has been given credit for ending the last two economic recessions, of
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1991 and 2001. Explain. 9. What actions has the Fed been taking leading up to the current economic crisis? Discuss these actions since 2004. 10. Back to the Model, with crowding out: C = 200 + .9 (PDI) PDI = Y – Tx Tx = 300 G = 300 I = 800 – 10,000 (.03) (X – M) = 0 a. What is equilibrium income in the economy? What is the government budget? b. Now, the government tries to end a recession with a fiscal stimulus increase of 300, and to get this they borrow money by issuing bonds that increases the interest rate to 6% (.06). What is the new equilibrium income? What is the government budget? c. Explain what happened in this example. 11. During this current recession, the Federal Government has been able to borrow money at a very low rate. What is this about?...
View Full Document

This note was uploaded on 10/19/2011 for the course ECON 104 taught by Professor Dolenc during the Spring '08 term at UMass (Amherst).

Page1 / 2

Worksheet 6 - 1991 and 2001. Explain. 9. What actions has...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online