What option does the central bank have to stimulate economy

Reference no: EM13186416

1. What is Keynesian economics? Explain how policymakers used Keynesian economics in response to the Great Recession. Be sure to include discussion about the types of fiscal and monetary policies that were used.

2. What is a long-run consequence of running persistent budget deficits? Why is it a problem? Provide reasons from the textbook or reasons discussed in the (2008) movie, I.O.U.S.A.

3. If conventional monetary policy can no longer lower interest rates, what option(s) does the central bank have to stimulate the economy? Provide an example of the Fed's actions listed in the textbook or from the October 30th FOMC press release.

4. If the economy is currently in a long-run equilibrium and the central bank increases the money supply, what effect does this have on the aggregate price level? Explain why it is important to insulate central bankers from political pressures in their conduct of monetary policy.

Reference no: EM13186416

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