ECO 203 Week 3

ECO 203 Week 3 Quiz

ECO 203 Week 3 Assignment

Given the role of the Fed in our economy, how can the Fed use the tools that it has to influence an economy that is in a recession? The Fed has three tools to influence the direction of the economy; in your two to three page paper, make sure to address each of them and what the Fed should do to get the economy out of a recession.

Discussion Questions

While many thought that the 2008 fiscal stimulus plan described in the feature on pg. 174 was a good idea, some did not. Some even thought that Congress didnt go far enough. In retrospect, who was right? Did the economy experience a recession in 2008 or 2009? What happened to employment during the rest of 2008? What are some of the alternatives to a tax cut that might have been used?

Why do you think the FED evaluates the money multiplier when making decisions with regard to the money supply? What function does the money supply serve in our economy to influence certain economic variables? Why does the FED like to fight inflation in our economy and is inflation a concern right now given our current economic situation?