Re: Week 6 Discussion Questions ECO Money & Banking

Discussion 1

Analyze the three different money models discussed in Chapter 11 to determine which model seems most appropriate for explaining the way money works to someone with a limited economic background.  Explain your rationale.

From the e-Activity, discuss the significance and meaning of quantitative easing in the context of the liquidity preference model (increase in the quantity of money supplied).  Provide specific examples to support your response.

Discussion 2

Create a realistic scenario that illustrates the aggregate-demand / aggregate-supply model.  In your scenario, you should identify changes in specific variables that cause each curve to shift.

Choose ONE of the statements below and discuss the impact on output and prices using the AD-AS model.

“In 2012, the unemployment rate will not fall significantly.”

“The slump in the housing prices, coupled with tighter lending standards, will make the economic recovery slow and painful.”

“Increasing budget deficits will make the economic recovery uncertain and will hamper future economic growth.”