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Monetary and Fiscal Policy

Federal Reserve Bank of San Francisco. (2004). U.S. Monetary Policy: An Introduction. Retrieved on September 1, 2011 from: http://www.frbsf.org/publications/federalreserve/monetary/MonetaryPolicy.pdf

The U.S. Government Printing Office Published a "A Citizen's Guide to The Federal Bugdet." While this is not available for more recent years, it has some useful information about the federal budget.

GPO Access: Citizen's Guide to the Federal Budget: Fiscal Year 2001. Retrieved September 1, 2011from: http://www.gpoaccess.gov/usbudget/fy01/guidetoc.html

For more recent data, the New York Times has an interactive on President Obama's 2011 Budget Proposal and includes information on the 2010 budget:

New York Times: Obama's 2011 Budget Proposal: How It's Spent. Retrieved on September 1, 2011 from: http://www.nytimes.com/interactive/2010/02/01/us/budget.html

Another good reference with more recent data:

Center of Budget and Policy Priorities. Policy Basics: Where do Our Federal Tax dollars go? Retrieved September 1, 2011 from: http://www.cbpp.org/cms/index.cfm?fa=view&id=1258

Please address the following questions.

Clink on this interestic graphic of the U.S. GDP Growth Rate:

U.S. GDP Growth Rate. Retrieved September 1, 2011 from: http://www.tradingeconomics.com/economics/gdp-growth.aspx?Symbol=USD

1. How is a recession defined? Is the U.S. currently in a recession? Explain.

2. Assume you are an advisor to President Obama. What fiscal policy tools could be used to stimulate the economy? Be sure to review Obama's 2011 Budget Proposal (NY Times). Are there any specific areas that you would change?

3. Now assume you are an advisor to Ben Bernake. What specific tools can the Federal Reserve use to stimulate the economy and increase economic growth. Please identify at least two tools.

4. What should the Fed do if it wanted to reduce inflation in terms of the money supply?

Solution Preview

Monetary and Fiscal Policy
Federal Reserve Bank of San Francisco. (2004). U.S. Monetary Policy: An Introduction. Retrieved on September 1, 2011 from: http://www.frbsf.org/publications/federalreserve/monetary/MonetaryPolicy.pdf

The U.S. Government Printing Office Published a "A Citizen's Guide to The Federal Budget." While this is not available for more recent years, it has some useful information about the federal budget.

GPO Access: Citizen's Guide to the Federal Budget: Fiscal Year 2001. Retrieved September 1, 2011from: http://www.gpoaccess.gov/usbudget/fy01/guidetoc.html

For more recent data, the New York Times has an interactive on President Obama's 2011 Budget Proposal and includes information on the 2010 budget:

New York Times: Obama's 2011 Budget Proposal: How It's Spent. Retrieved on September 1, 2011 from: http://www.nytimes.com/interactive/2010/02/01/us/budget.html

Another good reference with more recent data:

Center of Budget and Policy Priorities. Policy Basics: Where do Our Federal Tax dollars go? Retrieved September 1, 2011 from: http://www.cbpp.org/cms/index.cfm?fa=view&id=1258

Please address the following questions.

Clink on this interestic graphic of the U.S. GDP Growth Rate:

U.S. GDP Growth Rate. Retrieved September 1, 2011 from: http://www.tradingeconomics.com/economics/gdp-growth.aspx?Symbol=USD

1. How is a recession defined? Is the U.S. currently in a recession? Explain.

As per nber.org, "A recession is a period between a peak and a trough, and an expansion is a period between a trough and a peak. During a recession, a significant decline in economic activity spreads across the economy and can last from a few months to more than a year." Recession refers to the decline in the growth of the National Income to zero or insignificant level. As per investorwords.com, GDP or National Income is the "total market value of all final goods and services produced in a ...

Solution Summary

The solution discusses the recession, fiscal policy tools to stimulate the economy and how the federal reserve could reduce inflation in 112 words.

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