Given the democratic political structure of the United States, make an argument against the independence granted the Federal Reserve.
What will be an ideal response?
One could argue that the significance and impact of monetary policy is so large that it should not be entrusted to people who are not elected by the populace. The officials making fiscal policy have to answer to the voters, on the other hand people who are formulating monetary policy are insulated from the voters and this is at odds with the concept of a representative democracy.
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In the United States, between 1961 and 2011, there has been
i. a consistent , non-changing growth rate of potential GDP per person. ii. an increase in the standard of living based on real GDP per person. iii. fluctuations in real GDP per person around potential GDP per person. A) ii only B) i, ii and iii C) i and ii only D) ii and iii E) i only
Ricardian equivalence argues that when the government
A) increases taxes and raises its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. B) cuts taxes and decreases its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. C) cuts taxes and raises its surplus, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. D) cuts taxes and raises its deficit, consumers anticipate that they will face lower taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. E) cuts taxes and raises its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving.
Exhibit 9-8 Keynesian aggregate expenditures model
?
In Exhibit 9-8, an increase in aggregate expenditures causes:
A. a movement down the aggregate demand curve from equilibrium real GDP $600 to equilibrium real GDP $1,000. B. a movement up the aggregate demand curve from equilibrium real GDP $1,200 to equilibrium real GDP $1,000. C. a shift of the aggregate demand curve to the right, causing equilibrium real GDP to increase from $600 to $1,000. D. a shift of the aggregate demand curve to the left, causing equilibrium real GDP to decrease from $1,200 to $1,000.
An increase in U.S. exports to Japan ________ the demand for U.S. dollars and ________ the supply of yen.
A. increases; increases B. decreases; decreases C. increases; decreases D. decreases; increases