What actions should the Fed take if it believes the economy is about to fall into recession?
What will be an ideal response?
If the Fed believes the economy is about to fall into recession, it should conduct expansionary monetary policy, increasing the money supply and reducing interest rates. In implementing expansionary monetary policy, the Fed could lower the discount rate, lower the reserve requirement, and/or have the trading desk purchase U.S. Treasury securities.
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One important reason why the Solow residual may be strongly procyclical even if the actual technology used in production doesn't change is that
A) employment is procyclical. B) resource utilization is procyclical. C) demand shocks are the dominant force determining the business cycle. D) the coefficients (a and 1 - a) on capital and labor in the production function are procyclical.
Which of the following best represents government saving?
A) T - (G + TR) B) (Y - TR) + I C) (Y - C - G - NX) D) (Y + TR - T) + C