Problem 1. What are the two types of fiscal policy and how are aggregate expenditures affected by each policy?
Problem 2. Briefly explain how each of the Federal Reserve's Monetary Polciy tools affects teh LM curve.
Problem 3. In the short-run what is the policy dilemma when the economy is experiencing stagflation>
Problem 4. If a government is concerend with crowing out, how can monetary policy accomodate fiscal policy in the context of the IS-LM model
Problem 5. Explain the difference between fixed and flexible exchange rate regimes? Give examples of conutries using fixed and flexible exchange rate regimes. Whate are the advantages and disadvantages of teh different regimes?
Problem 6. Explain the difference between the current account and capital account in the Balance of payments. What is the value of the US currect account and capital account today?
Problem 7. Explain what happens to bank reserves and the federal funds rate for an open market purchase of government securities by the Fed.