Local Currencies

About 30 U.S localities circulate their own currency with names like "Ithaca Hours" and Dillo Hours." Doing so is perfectly legal (although by law they are subject to a 10 percent federal tax, which currently the government is not collecting). These currencies are used as payment for rent, wages, goods, and so on. Are these currencies money? Explain.

Federal Funds Rate

Suppose the economy is currently at potential output and the inflation rate is 8%. Suppose the federal funds rate is currently 3% a. The board of governors meets to set a new target federal funds rate. Would you expect it to be 2% or 4%? b. How would you expect the Fed to reach the new target? c. What impact would this have on the price level and real GDP in the SR and LR (use the AD/AS model).

Federal Reserve Policies

New data available to the Federal Reserve shows that the unemployment rate has risen to 7%. The Federal Funds rate is currently 5%. a. The Federal Reserve is considering whether to raise the Federal Funds rate to 6%, lower it to 4%, or leave it at 5%. What do you suggest? Carefully Explain. b. Based on your answer to part a above would you suggest the Federal Reserve, buy bonds, sell bonds, not buy or sell bonds? Carefully Explain. c. Using the AD/AS model what do you predict will happen to the level of Real GDP and the Price level in the U.S. in the Short-Run and Long-Run? Carefully Explain (a graph would help).

Federal Reserve and the Sale of Bonds

If the Federal Reserve were to sell bonds, what would likely happen to the money supply and interest rates? Carefully Explain (the money market graph would help). Using the AS/AD model what do you predict will happen to the level of Real GDP and the Price level in the U.S. in the Short-Run and Long-Run? Carefully Explain (a graph would help).

Public Budgeting Question - Property Taxes

Which of the following is an advantage that property taxes have compared to income and sales tax? Options are: property taxes are the least regressive, property taxes bring the largest amount of revenue, property taxes have lower administrative cost, or possibly that none of these options are true.