1) Over the past 7 years the Federal Reserve has taken many expansionary actions such as keeping interest rates low and buying government bonds and mortgage-backed securities to increase the money supply, hoping to spur buying and investment. However, aggregate demand is still weak. Do you think the Federal Reserve should lower the reserve requirement, thus allowing banks to lend out more money? What are the risks related to reducing the reserve requirement?
2) To minimize the depth and length of the recession that began in 2007, the federal government took actions intended to increase aggregate demand. Do you support the government’s actions (decreasing taxes, increasing government spending, etc.)? Support your answer.
3) Which problem do you think is worse for an economy: high unemployment or high inflation? Why?
4) The US has a negative balance of trade. What are your ideas for helping the US export more and import less?