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

How the built-in stability measures will reduce the effect of the lag time of monetary and fiscal policies in both expansionary and contractual growth.

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?

What does the Fed control?

There is often a misconception that the FRB has control over the market interest rates and the level of economic activity. Even if it did, it does not control the demand for money. It does not control market interest rates directly, nor instantly. What precisely does the FRB control and how do these tools work their eventual ...continues

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

Does the Federal Debt Matter?

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?

Time Lags of Monetary and Fiscal Policies

Considering the long time lags of monetary and fiscal policies, what if the economy needs a boost today, how would this be accomplished quickly and effectively?

Monetary & Fiscal Policies

How is it that monetary policy, such as open market operations, injects "new" money into the economy, where as fiscal policy such as tax incentives does not inject "new" money into the economy? What is the difference? Could you explain.