Fiscal Policy and Monetary Policy

Thinking about the documentary watched in class, HBO Too Big To Fail, Opening the Vault, first describe the differing roles of automatic stabilizers and discretionary fiscal policy in response to changes in the economy. Next, describe the impact on the economy as a result of the multiplier effect from government purchases. Then, briefly, describe the role of open market operations in the central bank that could be used to contradict discretionary fiscal policy. In doing so, be certain to describe the use of bank reserves as a countercyclical monetary policy and the impact on the economy when the central bank changes the interest rate paid on reserves at the central bank. Lastly, give one example of open market operations from a recent news article.