1. Compare and contrast what policies Keynes and Hayek advocated regarding how the federal government should manage the economy. (Note: There is no need to include biographical information about their lives)
2. The Federal Reserve policy makers use several different tools to influence the money supply and interest rates. The three primary tools used are the operations of the Federal Open Market Committee (FOMC), reserve requirements, and the discount rate. Describe each of these tools regarding how they are used by the Federal Reserve to influence the money supply and interest rates. Include in your answer the difference between expansionary and contractionary monetary policies.
3. Because of the close ties between macro-economics and political decision making it is important to recognize what area of economics, if any, is embedded in the decisions. The following are eleven current or historical actions dealing with government policy. For each scenario determine if it represents fiscal policy, monetary policy, or neither fiscal or monetary policy (not all government decisions are macro-economic in nature). Make sure to explain your answer.
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