Scenario: The country is experiencing a recession where the unemployment rate is 10% and climbing. You currently still have your full-time job, but you are concerned about the economy of the future. Will you be able to keep your job? Will you be able to move up the ladder in the workforce? Will you ever be able to buy a home?

Your assignment:

1. How would you respond to this economic situation based on the situation described above? How would you handle your money? Would you spend more or less? Why? Would your actions probably help the recession? Explain.

2. According to fiscal policy, how should the government react? What should happen to taxes and spending? Why?

3. According to monetary policy, what should the Fed do? What should happen to the discount rate, reserve requirement, interest rate on reserves, and open market operations? Why should they take those actions?