Federal Budget

To reduce the federal deficit, the government would have to cut back on government purchase, transfer payments, and/or increase taxes. How does the federal deficit affect GDP and the multiplier? Would an attempt to reduce the budget deficit not increase it? Does today's deficit not create tomorrow's surplus?

Monetary Policy

What do you think of the effectiveness of US's monetary policy over the past three years, including the frustrating years of 2001-2002?

Federal Budget

How does deflation further accelerate recessionary spirals and become the worst possible nightmare, and why are government deficits the best response?

Monetary & Fiscal Policy

I think I am somewhat confused. From several of the OTAs, it has been indicated that fiscal policy is better than monetary policy to stimulate a recessionary economy. Fiscal policy requires legislation. Wouldn't fiscal policy take a while to put into effect? On the other hand, I understand that monetary policy has a lag time. ...continues

Inflation vs Unemployment

Which is worse inflation or unemployment?

Monetary Policy

Does anybody want to illustrate Monetary Policy using the following example: Let's say the Fed Reserve decreases interest rates by 5% (which they did recently over a period of 2 years). Manufacturers who used to offer 4% financing now are willing to do it for 0%. This causes aggregate demand for cars to increase by 100 Million, ...continues

What are the lags in Monetary & Fiscal Policy?

If monetary and fiscal policy have fairly long lag times, how can they be effective ways to neutralize the economy?

Monetary & Fiscal Policy-Time Lags

What if the economy needs a boost today, how would this be accomplished quickly and effectively?

Does the Federal Debt Matter?

In very simple terms, is the current level of the federal debt that has been accumulated over the years a problem?

Fiscal and Monetary Policy

Let's say that we have a fictitious economy that has had a real GDP for the last two years of 1.5%, inflation has been 1 - 2% during this period, unemployment has risen from 6.5% to 7.3%, the federal funds rate is 3.5% and the discount rate is 3.25%, and the government has been operating at a deficit of approximately $60 billion ...continues