1. Who was John Maynard Keynes? Identify and explain four key points about his economic ideas that are directly relevant to the concepts that we have covered in this section of the class. What was Keynes’s view about the use of fiscal policy? Be specific in your answer.
2. What is fiscal policy and who is responsible for fiscal policy in the United States? Explain how fiscal policy is usually used during a recession and also during times of inflation. What are three possible challenges to or problems with using fiscal policy?
3. What is the size of the U.S. public (or national) debt? Who owns the U.S. public debt? Is the public debt a potential problem for the U.S. economy? Provide two credible reasons to support your answer.
4. What is the Federal Reserve? List and describe three of the main roles of the Federal Reserve within the United States economy.
5. What is monetary policy? Who controls monetary policy in the U.S. economy? What are the two types of monetary policy and how are they used? Identify and describe 3 tools that are used to implement monetary policy in the United States. Which monetary policy tool do you think is the most effective? Why?
6. List and describe three limitations to effective monetary policy.
7. You have been named as chair of the Board of Governors of the Federal Reserve. During your first meeting as chair, the FOMC members ask you for your opinion of monetary policy for the United States. Based on your knowledge of economic trends for the United States (including real GDP, real GDP per capita, unemployment rate, inflation, etc.), you need to recommend that the Federal Reserve engage in expansionary or contractionary monetary policy. Which tool should the Federal Reserve use? Why? Include three reasons to support your recommendations.