Question 1

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?

Question 2

What is the basic objective of monetary policy?What are the major strengths of monetary policy?Why is monetary policy easier to conduct than fiscal policy in a highly divided national political environment?Which do you think is the most effective?

Question 3

How do stocks and bonds differ in terms of the future payments that they are expected to make?Which type of investment (stocks or bonds) is considered to be more risky?Given what you know, which investment (stocks or bonds) do you think commonly goes by the name "fixed income"?

Question 4

Mutual funds are very popular.What do they do?What sorts of different types of mutual funds are there?And why do you think they are so popular with investors?

If you were investing today, where would you put your money--be specific and why?