Monetary Policy Stimulus

Topics: Monetary policy, Federal Reserve System, Inflation Pages: 1 (253 words) Published: December 13, 2010
1. Suppose that you have been hired as a consultant to advise the Federal Reserve Bank on Monetary Policy. They seek to eliminate our persisting unemployment situation. Devise a package of steps involved with your monetary policy stimulus plan, and convince Fed Chairman Bernanke to use your approach?

2. With the ongoing unemployment, the Obama Administration, Congress and the Federal Reserve continue to struggle for stimulus solutions. They seem to be taking both Fiscal and Monetary Stimulus measures. Compare and contrast the detailed dynamics, mechanisms, and potentials of Fiscal Policy and Monetary Policy.

3. Some reject stimulus measures in all current policy forms. These economists focus on the damaging activities and decisions of (a) private corporations, (b) commercial banks, and (c) wealthy individuals. How can these three groups that lead our private market system, each in their own way, frustrate and foil the goals of a combined fiscal and monetary stimulus program.

4. Given our currently high unemployment rate and low inflation rate, argue "for or against" a Supply-Side policy focus versus a Demand-Side policy emphasis.

Upon completing ECO201, you have been hired by the Obama administration to advise them on Foreign Exchange Policy. Their concern is that low interest rates and a large trade deficit have led to a depreciating dollar. Accordingly, first prepare an overview of the way such rates and trade conditions can threaten our currency value. Then secondly, advise the President whether (or not) steps should be taken to strengthen the dollar in foreign exchange markets.
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