Reference no: EM131093686

Question 1. A growing number of economists view the fed's new willingness to take on more of the nation's debt as inflationary in the long run.

• Explain the rationale for the inflation worry.
• Why is the "long run" qualification added?

Question 2. Thanks to a sharp cut in interest rates engineered by the fed, many economists expect the economy to be growing again, albeit slowly, by spring, which is the soonest any of present bush's legislative proposals are likely to be enacted.

• What major advantage of monetary policy over fiscal policy does this clipping underline?
• How would the fed have enginerred the cut in interest rates?
• If this policy is so good, why isn't it done more vigorously, more often?

Question 3. By Raising and lowering short-term interest rates to keep inflation moving at a steady pace, many central bankers and academics thought they had finally found a monetary policy solution to conquer the booms and busts of the business cycle.

• Wat is this monetary policy called?
• When would interest tares be raised and when lowered?

Question 4. This brings us back to the fears of higher interest rates before the market break. These fears are still potent, especially if inventors see through the temporary reduction in interest rates made possible by stepping up the rate of creation of money supply.

How does stepping up the rate of creation of the money supply reduce interest rates?Why would it be only temporary?

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