Make the case for and against an independent Federal Reserve
What will be an ideal response?
Case for: 1. An independent Federal Reserve can shield the economy from the political business cycle, and it will be less likely to have an inflationary bias to monetary policy. 2. Control of the money supply is too important to leave to inexperienced politicians.
Case against: 1. It is undemocratic to have monetary policy be controlled by a small number of individuals that are not accountable. 2. In the past, an independent Fed has not used its freedom wisely. 3. Its independence may encourage it to pursue its own self-interest rather than the public's interest.
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Which of the following would be considered an example of fiscal policy?
A. Provision of additional cash to the banking system. B. A reduction in income tax rates. C. A broad government initiative to reduce the country's reliance on agriculture and promote high-technology industries. D. Interest rate hikes generated by a reduction in the money supply.
When actual output equals potential output, there is ________ output gap and the inflation rate will ________.
A. no; be equal to the expected rate of inflation B. an expansionary; exceed the expected rate of inflation C. an expansionary; be lower than the expected rate of inflation D. a recessionary; exceed the expected rate of inflation
____ experience lower rates of unemployment than do ____
a. High school graduates; college graduates b. College graduates; high school graduates c. Adult females; adult males d. Black males; white males
An individual owns a $100,000 home. She determines that her chances of suffering a fire in any given year to be 1/1000 (0.001). She correctly calculates her expected loss in any year to be $100. Explain why this really isn't a good way to measure her potential for loss.
What will be an ideal response?