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    The Federal Reserve system

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    The following are five scenarios dealing with macro-economic policy. For each scenario determine if it represents fiscal policy or monetary policy, and explain your answer.
    a. As President, George W. Bush and congress passed a tax decrease across all tax brackets.
    b. When President Clinton was in office during the 1990's there was an intentional policy of reducing interest rates, both short and long-term, economy wide.
    c. Beginning with the Bush administration and continuing with the Obama administration there was a bailout of the financial system.
    d. The health care reforms that have been proposed.
    e. The Federal Reserve system buys Treasury securities from banks in order to reduce bank holdings of securities and increase their cash balances. One reason to do this is to encourage banks to loan to businesses.

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    c. Beginning with the Bush administration and continuing with the Obama administration there was a bailout of the financial system.

    In this case it is the government using money to bail out banks. Though you have financial institutions involved, and the government was bailing out the financial system, it involves ...

    Solution Summary

    The Federal Reserve system is emphasized.

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