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Discussion and Essay Questions We are currently in a recession with high unemployment and low growth. The discount rate is at 0.22%. Does the Federal Reserve have any remaining tools to help stimulate the economy? Compare the tools used by the President, congress, and the Federal Reserve during the 2009-2010 period to the tools used during the Great Depression. Review the recessionary periods of the 1930s and the 1970s. Which does the current period resemble? Do you believe the Federal Reserve acts independently of political pressures? Why or why not? Does the United States still have enough credibility to use fiat money? Should it switch to another form of currency? Define at least three areas where monetary policy differs from fiscal policy. When would you use each? Describe the effects of the Fed’s interest-rate changes on the liquidity of banks and borrowing. What key forces drove gold to record prices in 2010? What forces would make you prefer gold to a house in the next five years? Do you think currency should be backed by gold? Should the gold standard still exist? Why don’t we have an oil standard rather than a gold standard when oil is clearly a more liquid commodity? Given that homes usually represent most of the net worth of families in this country, should mortgage interest be tax-deductible? Why is home-mortgage interest deductible while car-loan interest is not? What impact does this deduction have on the money supply? Think of ways to use monetary policy to tighten and then loosen the money supply? The new credit-card policy guards heavily against sub-prime borrowing. Whom does this hurt? Whom does this help? Is PayPal a device for stimulating or reducing liquidity in M2? How does doubling the tax on corporate dividends affect retired people? What does this do to the money supply and spending?