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How does each of the following relate to the financial crisis of 2007-2008: declines in real estate values, sub- prime mortgage loans, mortgage-backed securities. Discuss
- How does each of the following relate to the financial crisis of 2007-2008: declines in real estate values, sub- prime mortgage loans, mortgage-backed securities. Discuss the role of the FED in helping to manage the crisis of 2008.
- Based on your answer to the previous question, why do economists nearly uniformly support an independent Fed rather than one beholden directly to either the President or Congress?
- Explain the links between changes in the nation's money supply, the interest rate, investment spending, aggregate demand, real GDP, and the price level.
- Suppose that you are a member of the Board of Governors of the Federal Reserve System. The economy is experiencing a sharp rise in the inflation rate.
- What change in the federal funds rate would you recommend?
- How would your recommended change get accomplished?
- What impact would the actions have on the lending ability of the banking system, the real interest rate, investment spending, aggregate demand, and inflation?
5.What is the basic objective of monetary policy?
6.What are the major strengths of monetary policy?
7.Why is monetary policy easier to conduct than fiscal policy?
8.Distinguish between the federal funds rate and the prime interest rate.
9.Why is one higher than the other?
10.Why do changes in the two rates closely track one another?
11.Protesters insist that the economic benefits of trade have social costs that go unrecognized.
- Whether or not you agree with them, make a list of those social costs.
- Are you, individually, better off with cheap clothing and electronics? In that context do we owe something to those who bear those social costs?
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