1. 1. Ways that Federal Reserve can increase the quantify of money in the economy?
2. How can we have a budget deficit and budget surplus?
3. What can the government do using fiscal policy to get us out of recession?(2 things)
4. During a recessionary gap, how will the aggregate demand move when the government
uses fiscal policy ?
5. What happens to the banking service when the Federal Reserve makes an open market
purchase?
6. During a recession, what can the federal reserve do to stimulate aggregate demand
using interest rate?
7. If you’re in a recessionary gap what can the federal reserve do to get the economy out
of recession(graph)? How will the aggregate demand move?
8. What happens to the exchange rate of the dollar, and net exports if the Federal Reserve
changes the federal funds rates/interest rates?
9. If the Federal Reserve wants to fight a recession what can the federal reserve do in
terms of federal funds rate to shift the aggregate demand curve?
10. If we are in an inflationary gap what can the Federal Reserve do in terms of federal
funds?
11. (graph) If the US is involved in international trade, estimate the amount of imports at
the at the world price?
12. (Use Graph above) how much at the world price would the US consumers buy and the
US producers produce?
13. What will a tariff do to the total economy, will it make it worst or better in terms of debt
weight loss?
14. Who gains from tariffs? Why?
15. (Graph)What is the US production with free trade, and what is the US production after
the tariff?
16. (Using Graph above) How much is imported with free trade and how much is imported
after the tariff?
17. If a tariff is exposed who gains and who loses in terms of consumers and producers?
18. What are the arguments used to protect local production?
19. If the US Company imports something where is this transaction recorded?
20. If someone sends money abroad or a gift where is this reported?
21. If a country makes an investment in another country( ex. Buys an asset) where is this
reported?
22. (graph)Estimate the size of the current account
23. Your given two exchange rates, 2007 and 2008, determine whether the dollar has
appreciated or depreciated?
2. 24. If a country has higher inflation, has the currency appreciated or depreciated? What are
the Factors that affect the exchange rate? Gdp deferential, interst rate deferential, and
? ( 3 things)
25. If the Federal Reserve wanted to appreciate the dollar against the Mexican peso. What
would they do?