The Role of the Federal Reserve Bank

Question 1

Exploring the Role of the Federal Reserve Bank

The Federal Reserve Bank (the “Fed”) is the central bank of the United States. One of its jobs is to manage the money supply. Sometimes it increases the money supply. Sometimes it decreases the money supply.

Reply to these questions in your post:

· Name at least one action that the Fed could take to reduce the money supply and raise interest rates.

· Given our current economy, would you recommend that the Fed reduce the money supply and raise interest rates, or expand the money supply and lower interest rates? Please explain.

Question 2 

There is often talk in the news recently about increasing tariffs on some imports. Watch the video (Incidence of a Tariff) to prepare for this week’s discussion.

Reply to these questions in your post:

· When the United States puts tariffs on imports, who do you think ultimately pays these tariffs? Is it the foreign companies selling here, American consumers, or both? Explain your answer.

· Is it good or bad for American consumers when the United States puts tariffs on imports?

Question 3

Did economics teach me that?

At the beginning of the class I told you that economics would teach you how to think, not what to think. Here is a chance for you to demonstrate what you learned about economic analysis.

Two of the main topics we studied in this economics class were opportunity cost and incentives. Choose one of the two topics below and respond to the questions.

1. The humorist, P.J. O’Rourke, said (tongue in cheek) that if we want to stop drivers from tailgating we should weld 6” steel spikes in the center of steering wheels pointing back at the driver.

o Why does he think this would reduce tailgating?

o Is his analysis based on opportunity cost or incentives? Explain.

2. Someone once said that economics tells us that disease should not be 100% eliminated from the earth.

o Why would anyone think that disease should not be completely eliminated?

o Is this analysis based on opportunity cost or incentives? Explain.

I need 4 sentences for each question

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