Question: 1. What happens to the credit market if the FRS makes an open market sale at the same time as the federal government increases borrowing to finance higher deficits? How does this combination affect interest rates, investment spending, and the economy in the short run and the long run? Explain.
2. Where do you stand on interest rate ceilings? Are limits on deposit interest rates a good idea? Should limits on loan interest rates be retained? Defend your answer in each case.