In modern times, Monetary Policy dominates. Monetary policy and the actions of the Fed. are in the news every week. Fiscal Policy, on the other hand, is rarely used.Why? (This is more a pollical science question than an economic question.)

 

2. In Keynes's day, and especially by Keynes himself, it was thought Monetary Policy was ineffective. Why did Keynes, and many of the economists of his day feel this way?If you wish, you may use the Equation of Exchange to describe the problem as they saw it.

3. Using ordinary language, not a definition you pulled off the internet, explain why the money supply increases when the Fed. lowers the reserve requirement.

4. This seems confusing: When the Federal Reserve purchases new bonds from the U.S. Treasury, it causes inflation. But, if the general public purchases new bonds from the U.S. Treasury, it does not cause inflation. Explain why.