AB/204 AB204 AB 204 UNIT 9 DISCUSSION 2

AB 204 UNIT 9 DISCUSSION 2

Unit 9: Monetary and Fiscal Policy Applications - Discussion

General Information:

To be an effective learning tool the Discussion Board topics require your active discussion of the topic with at least two of your classmates.

• First post made during, or before, Saturday.
• Posts on at least 3 different days.
• Responses to at least two other classmates.
• Substantive posts that stimulate further active discussion, posts that accurately reflects the learning, that are logical, and clearly presented with correct spelling, word usage, and grammar.
• To be counted as a substantial post, your main post to the Discussion topics should be at least 200 words per Discussion topic.

Monetary and Fiscal Policy Applications

The Discussion topics focus on the effects of monetary and fiscal policy instruments on the aggregate demand in the economy, and the short-run trade-off between the rate of inflation and rate of unemployment. The specific areas of discussions include how monetary and fiscal policy instruments are used to change AD, the differences between monetary and fiscal policy and their respective instruments, and policy measures to deal with the short-run trade-off between rates of inflation and unemployment in the economy.

Read Chapters 21 and 22, and remember to include references and links to the websites that are important contributors to your posts (comments). Respond to two of the following Discussion topics.

Topic 2

There is a short-run tradeoff between inflation rate and unemployment rate. In the short-run the tradeoff of between inflation rate and unemployment rate creates a challenge for macroeconomic policymakers.

a.    If you were macroeconomic policymaker, how do you balance the short-run tradeoff between inflation rate and unemployment rate? Explain.
b.    What is the historical relationship between rates of unemployment and inflation in the U.S. economy? What are the most current figures for the unemployment rate and the inflation rate? What does this say about the U.S. economy today?