Discussion Question 1
As you know, there has been considerable debate on two sides of an issue that has profound consequences on fiscal policy in the US. One position is for a constitutional amendment guaranteeing a balanced government budget each year, and the other against such an amendment. What are the relevant arguments on each side? What is your opinion on this question? Why?
Discussion Question 2
The 2008 Crisis and the Fed
Read this Economics In Action (EIA) item in your text. It explains how the Fed responded to the 2008 financial crisis. Please discuss the following questions:
1. What did the Fed create in 2008 to try to keep credit markets functioning?
2. Why did the Fed feel the need to keep credit markets functioning?
3. Why did the Fed's actions make it uncomfortable?
4. What is your opinion of the wisdom of the Fed's actions? Are there risks? To whom?