Money is lubricant in the economy

Assignment Help Microeconomics

Reference no: EM133643997

Question

Money is a lubricant in the economy just like you have oil in your car engine. Money lubricates the wheels of the economy, particularly in its transactionary functions, to ensure that the economy runs smoothly. The Federal Reserve Bank and the Federal govt are co-drivers in the front seat of the economy. It is their responsibility to ensure that the economy is being driven to the right direction through proper applications of their respective policy measures. The FRB would be the first to tell you that, they are an independent private entity and not controlled by the Federal govt. The question is, how do these co-drivers, with the articulations of their respective policy tools, drive the economy in the right direction without driving it into a ditch? Who do you think will be the better driver if left alone to do the driving? Support your answers with some research and references. (Hints: make sure you consider the fiscal and monetary policy tools and how they are applied).

Reference no: EM133643997

Questions Cloud

Explain the principle of comparative advantage : Explain the principle of comparative advantage. Does it tells us how the gains from trade will be distributed?

Indifferent between the two types of subsidy : How much cash subsidy would be required to make the individual approximately indifferent between the two types of subsidy?

Diversity would provide security against real estate crisis : The large number of mortgages and their diversity would provide security against a real estate crisis?

Pareto efficiency exchange equilibrium : We showed how a Pareto efficiency exchange equilibrium can be described as the solution to a constrained maximum problem.

Money is lubricant in the economy : Money is a lubricant in the economy just like you have oil in your car engine. Money lubricates the wheels of the economy,

Dollars fulfill three important economic functions : Dollars fulfill three important economic functions. Are giant stones as money any more strange than relying on gold?

Find and sketch the expansion path : Find and sketch the expansion path. How much capital and labor should Castro employ to produce 150 mugs a day?

Explain why it is good indicator for the economy : Explain why it is a good indicator for the economy and what it forecasts for the economy.

Neutrophilic band and neutrophilic segmented cells : Describe two main morphological differences between neutrophilic band and neutrophilic segmented cells.

User Account

All Pages