Discussion Questions
Write a 75-100 word response to each of the bulleted questions below. Each question must have its own response and meet the minimum word count.
1. What are the uses of money? How do commercial banks and Federal banks create money?
2. Is monetary policy conducted independently in the United States? Explain your answer.
3. Is it important for monetary policy to remain independent from all parties? Why or why not?
4. What is the difference between contractionary and expansionary monetary policy?
5. Which type of policy is more appropriate today and why?
6. What is the intention contractionary and expansionary monetary policy under a depression, recession, or robust economy?
7. What happens to the money supply, interest rates, and the economy if the Federal Reserve is a net seller of government bonds? What happens to the money supply, interest rates, and the economy if the Federal Reserve is a net buyer of government bonds? Why would the government implement a stimulus program into the economy?
8. Rank the factors that contribute to the discount interest rate from most important to least important. Justify your rankings Explain the degrees of credibility.