Assignment: Current Macroeconomic Policy
Need to answer each question with atleast 200+ words - NO APA format needed.
1 - Consider what causes the lags in the effect of monetary and fiscal policy on aggregate demand. What are the implications of these lags for the debate over active versus passive policy?
2 - Consider what might motivate a central banker to cause a political business cycle. What does the political business cycle imply for the debate over policy rules?
3 - Explain how credibility might affect the cost of reducing inflation.
Should monetary and fiscal policymakers try to stabilize the economy? The text presents some pro and con arguments on this question. What is your stance on the question?
4 - Should the government fight recessions with spending hikes rather than tax cuts? The text presents some pro and con arguments on the above question. What are some of these arguments? What is your preference?
5 - Should monetary policy be made by rule rather than discretion? Take a look at the history of inflation in the U.S. using the FRED database (do an internet search for FRED inflation). During the 1970s, monetary policy was largely discretionary. How does this impact your stance on the above question?