Discussions
Ch. 29: The Aggregate Expenditures Model
1. How do economists integrate the international sector (exports and imports) into the aggregate expenditures model?
2. How do economists integrate the public sector (government expenditures and taxes) into the aggregate expenditures model?
Ch. 33: Money Creation
3. Money makes the world go round. Money is created through a series of transactions involving Central Banks, financial intermediaries, businesses, and consumers. A failure of the process to work may cause the economy to freeze. Central banks may alter different rates and terms to increase or decrease the supply of money. Intermediaries may or may not react to the actions of the central bank. Describe the process through which money is created. Explain how current events--events less than 90 days--have affected this process and the effect current events will have on the economy as a whole.
4. Why is the U.S. banking system called a "fractional reserve" system?
5. How can a bank create money?
Ch. 34: Interest Rates and Monetary Policy
6. What does the Federal Reserve take into account when establishing general and specific rates of interest? Describe the recent tools the Federal Reserve has used to influence the U.S. economy, and explain their effects. In your opinion, have these measures been effective or ineffective in addressing the major concern or concerns of the business cycle?
7. Give some examples of monetary policy and of fiscal policy initiative that were used by the U.S. government to help the economy recover from the great recession of 2008. Which was more effective in your opinion, the monetary policy initiatives or the fiscal policy initiatives? Be sure to define monetary policy and fiscal policy in the first sentence of your note.
8. How is the equilibrium interest rate determined in the market for money?
9. What are the goals and tools of monetary policy?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.