Web-Based Issues Questions

Question 12.1

Click on the following article

http://www.epinet.org/webfeatures/viewpoints/inflation.html

Note that the date on this article (June 1999) was a period when the economy was growing quickly and the Federal Reserve was concerned about inflation. Given that the Federal Reserve’s rapid increase in interest rates in 1999 and 2000 probably contributed to the recession of 2001, do you think the author’s argument that the Fed was overly concerned with inflation was accurate. Should the Fed be less vigilant with inflation concerns in the future?

Question 12.2

Note to instructors: use this question only if Chapter 11 and Chapter 12 are studied together.

Click on the following article.

http://www.cato.org/events/money/papers/levy.pdf

The author is concerned about the use of fiscal and monetary policy. Discuss whether the author’s concern with regard to matching the policy tool to the goal is convincing. The author notes that there are “bad” things that come from surpluses, is he right?

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