Governments utilize monetarism to control inflation, but appear to also utilize covert demand-dampening strategems. I give several examples.

Traditional means of controlling inflation have to be used carefully as they can have unintended consequences. Interest rate increases negatively impact stock markets. At the same time, inflation must be kept within target limits, three per cent or less. Can alternatives to traditional monetarist devices be identified in modern economies? If they exist, what impact can they be expected to have?

As a member of the Federal Reserve you are speaking with a group of newly elected members of Congress to explain your operations. The members of Congress have asked you to address the following issues.

As a member of the Federal Reserve you are speaking with a group of newly elected members of Congress to explain your operations. The members of Congress have asked you to address the following issues. The Federal Reserve has traditionally conducted open market operations through the purchase and sale of government bonds. In principle, could the Federal Reserve conduct monetary policy through the purchase and sale of stocks on the New York Stock Exchange? Do you see any possible drawbacks to such a policy? Suppose the Federal Reserve purchased gold or foreign currency. How would this purchase affect the domestic money supply? [Hint: Think about open market purchases of government bonds... click for more

Federal Reserve...

1. Describe three ways in which the Federal Reserve can change the money supply. 2. If the Federal Reserve is going to adjust all of these tools during an economy that is growing too quickly, what changes would they make? 3. If the Federal Reserve is going to adjust all of these tools during an economic recession, what changes would they make? 4. What changes, if any, to the current condition of these tools would you make at the next meeting of the Federal Reserve? Explain why and the benefits/drawbacks of this strategy.

Foreign operations and currency denomination

Select a U.S. multinational company. In terms of currency denomination, discuss how the firm prices its revenues and costs. For MNE's with multiple foreign operations, consider any one of those operations and the contribution it is making to the parent firm's profits. Using this information, what do you think would be the effect of increases/decreases in the dollar's exchange value on the firm's profitability? Be sure to show all applicable work. 2-3 pages

International Monetary Relations

Congratulations, you just won the Irish Lottery! You bought a ticket while you were on vacation in Ireland, and you just won a 1 million Euro jackpot after all taxes were taken out. If the current exchange rate is US$1 equals 1.25 Euros, how much did you win in US dollars? Suppose that the interest rate in Irish banks is 5% for a one year CD. In the USA, the rate is 2% for a one year CD. If you left your winnings in Ireland, how many Euros would you have in a year? If you had taken your winnings back to the USA, how many dollars would you have? Suppose when you cashed in your CD in Ireland a year from now, the exchange rate had changed from US$1 to 1.25 Euro, to US$1 to 1.30 Euro. How... click for more