Reserve requirements refer to:

GDP measures:

Expansionary fiscal policy involves:

The Central Bank's primary tool for conducting monetary policy is:

When the Central bank conducts expansionary monetary policy, it typically:

The Federal Reserve is considering its policy options. Current economic conditions:

• Unemployment rate: 8%
• Inflation rate: 1%
• Federal funds rate: 2%
• GDP growth: -1%

a) Should the Fed adopt a dovish or hawkish stance? Explain your reasoning. (6 points)

Policy stance: __________________________________________________________

Reasoning: ____________________________________________________________

b) What specific monetary policy tools should the Fed use? List three and explain how each would help. (6 points)

Tool 1: ________________________________________________________________

How it helps: __________________________________________________________

Tool 2: ________________________________________________________________

How it helps: __________________________________________________________

Tool 3: ________________________________________________________________

How it helps: __________________________________________________________

If the Central bank wants to combat high inflation, it should adopt a _______ policy stance:

If the central bank wants to increase the money supply through open market operations, what does it do?

The government of Econoland is considering two fiscal policy options to combat a recession:

Option A: Increase government spending on infrastructure by $100 billion 

Option B: Cut personal income taxes by $100 billion

a) Which option represents expansionary fiscal policy? Explain why both or neither qualify. (6 points)_

b) For each option, explain how it would help stimulate the economy during a recession. (6 points)

c) Which option would you recommend and why? Consider political and economic factors. (4 points)

Define "budget deficit" and explain when governments typically run deficits: