You have the assignment of making a recommendation to the ...

[washai]

You have the assignment of making a recommendation to the Chairman of the Fed during a period of persistent, high inflation. What could you do to restore stable prices? What would you recommend instead if the problem was persistent high unemployment?

Question 2

Which of the following sentences about entrepreneurs stands true?
 a. They tend to be risk-averse individuals.
  b. They are more frequently found in societies that support social conformity.
  c. They help achieve technological progress.
  d. They are more frequently found in the local population of the developing countries.
  e. They usually belong to the traditional elite class.

[recede]

Answer to Question 1

In order to restore price stability (i.e., lower the rate of inflation) you could (1) sell government securities, (2) raise reserve requirements on bank deposits, (3) raise the discount rate, and/or (4) increase the interest rate the Fed pays on bank reserves.. You could also try to use moral suasion and urge banks to be more selective in making loans. This is all contractionary monetary policy. If the problem was persistent high unemployment, you would want to use expansionsary policy, which would reverse your policy recommendations--(1) buy government securities, (2) lower reserve requirements on bank deposits, (3) lower the discount rate, and/or (4) decrease the interest rate the Fed pays on bank reserves..

Answer to Question 2

c

[washai]

Correct answers!

[recede]

Great! Please up vote