Project #196403 - Macroeconomics

Computer Tutors

Subject Computer
Due By (Pacific Time) 08/16/2017 10:00 am

Part 1

Describe how financial institutions create money. Write a brief essay of at least 300 words that describes the process of creating money. In your essay you should


·         Differentiate process of creating money from minting coins or printing bills

·         Explain how the Federal Reserve System uses government borrowing to create money

·         Describe at least one other method by which new money can be created by any financial institution.



Part 2

Differentiate between fiscal and monetary policy. In 500 words explain how fiscal policy is different from monetary policy, including who implements these policies, the goals of each policy, and problems with or limits on those policies.  Define fiscal policy in general and discretionary fiscal policy in particular. 


·         Identify the tools of implementing fiscal policy and the goals intended by the use of these tools.

·         Define monetary policy and who implements monetary policy.

·         Identify the tools of monetary policy and the intended goals of using this policy.

·         For each type of policy clearly state the limits and unintended consequences of using these policies.


Part 3

Answer the following questions:


1. Describe what occurs to American imports and exports when the U.S. dollar is strong.  Describe what occurs to American imports and exports when the U.S. dollar is weak.


2. What precautions can the Federal Reserve take to avoid inflation for the entire economy? Explain each precaution using a specific example. 



3. What is meant by the term ‘stagflation’? What happens if stagflation occurs within the economy in terms of consumer spending and consumer confidence?


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