1-Aggregate Demand and Supply" Please respond the following:

• Thepriceofoilhasdroppedsubstantiallyworldwide.TheimpactofthischangeisonbothAggregateSupplyandAggregateDemand.Explain

2-"Fiscal Policy"

"Fiscal Policy" Please respond to the following:

• Who is in charge of making fiscal policy?
• Determine what fiscal policy measure has a more direct impact to the economy. Is it an increase in government spending or an equal decrease in taxes if consumer confidence is lower than the previous month? Explain your reasoning.
• WhyistheUSBudgetDeficitfallingandisitnowatalevelconsistentwithhistory?SeeThisWeekinBusinessNews,reportbytheCBOforhelp.

3-"Stabilizing an Economic Struggle"

"The Federal Reserve and Monetary Policy" Visit the The Business News and please respond to the following:

Part 1

• What is the mission and legal mandate of the Federal Reserve System? What policy tools are available to the FED to achieve their mission?
• What is the difference between an insolvent bank and an illiquid bank? Why/how does the FED treat banks that are insolvent differently from illiquid banks?

Part 2

The FED is Has cautiously increased the Federal Funds Rate. The Federal Funds Rate has been kept very, very, very low for a very long time and the FED made a very small increase. The question now is will they push the rate up a bit more. We don't know but you can check on the thinking via posted information each month by the FOMC.

• According to the FED what are its inflation and full-employment targets.
• Explain how changes in the money supply via the open market operation impact will raise interest rates and how the anticipated increase in interest rates will likely effect, GDP and employment.