Money is lubricant in the economy

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

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