Choose #1, #2 or #3 ( chose only one of the 3 questions) and write a brief ( 500 - 1000 words)
#1 - Which economic theory seems more accurate to you? Classical or Keynesian theory? In your explanation, describe the key assumptions of the theory you choose and explain why you think those assumptions are reasonable to make. In your answer, include research or example to justify your explanations.
#2- Is the US trade deficit a problem? Are there any problems associated with using the sale of financial assets to pay for imports? are there benefits to running a trade deficit if it means greater investment spending? Are there any other benefits to our trade deficit? Should we use trade barriers to try and reduce the trade deficit? How would such a plan work and what are the benefits and costs to such a plan ? Explain your answer.
#3 - Should we use discretionary monetary policy to try and stabilize the economy? Do we need any stabilization policy at all? Do we risk too much inflation by having the Fed try and keep the economy at full employment? Is the Fed board of governors too powerful or unaccountable? Should we consider using a rule to guide monetary policy rather than decisions of the board of governors? Are there any other ways we can improve the way the Fed conduct monetary policy? Explain your answers.