In this chapter, you will learn about how money and the banking system is important to financing businesses. After you have read Chapter 16, please use the topic below as a starting point for class discussions, but please feel free to generate and initiate your own topics, including any questions or comment you may have for the concepts and content of this chapter.

At a minimum for every chapter, you need to submit at least one primary discussion posting(s) in response to the instructor’s topic or a new topic initiated by another student. You also need to submit at least one secondary posting(s) commenting on other students’ postings. Please note that initiating a new topic is classified as a primary posting. In the subject line of your posting, please indicate whether it is primary, i.e. initiating a new topic, responding to the instructor’s topic or to a new topic initiated by another student, or secondary, i.e. commenting on other student’s postings.

1. Please read the chapter-opening case “Where Did All the Money Go” on page 513 and answer the following questions: Do you think the current fiscal policy adopted by the Federal Reserve is helping the economy? What would you differently to get the US economy back on track for economic growth and reduce the US deficit? Where do interest rates go from here? Should the Fed reduce or increase interest rates? Explain.

2 short replies

1.First post Responding to instructor topic

Do you think the current fiscal policy adopted by the Federal Reserve is helping the economy? As usual referring to our last government there will be good and bad news for example a bad is that this government is spending money at all levels local state and federal, and has been doing the opposite (Links to an external site.)Links to an external site. since the Great Recession. For seven bloody years, government budgets at all levels combined to make the Great Recession and its aftermath deeper and longer rather than shallower and shorter. This is not normal. In previous recoveries, government spending grew (Links to an external site.)Links to an external site.in comparison to where it was during the worst of the collapse. The post-2008 period is the only time when it shrank. The same holds true for public sector employment (Links to an external site.)Links to an external site.. The good news is that government are helping to faster create new jobs by added 0.46 of a percentage point to economic growth in the second quarter of this year.

What would you differently to get the US economy back on track for economic growth and reduce the US deficit? I definitely will cut the Federal government spending by downsize every federal department by cutting the most harmful programs. This will reduce almost one-quarter and balance the budget in less than a decade. Federal spending cuts would spur economic growth by shifting resources from lower-valued government activities to higher-valued private ones. Cuts would expand freedom by giving people more control over their lives and reducing the regulations that come with spending programs then I will use the savings to reduce any deficit. The interest goes to international bank and if the fed reserve raises them our economy will continue on the slow road to recovery so I think is okay to raise them by we need to wait a little bit more since government have not decided when.

2. Primary post- Response to Instructor’s prompt

I do not think the current fiscal policy is helping the economy. The gradual increase in interest rates is hurting our economy rather than helping it. We were in an economic growth mode and especially in the last quarter, the higher interest rates has affected the stock market as investors seek other ways to invest their money. Housing sales are down partly due to the rise in borrowing interest rates.

I would reverse the tariffs on China, to get back our trade revenue and increase our economic growth. In reducing the U.S. deficit, I would reduce the amount of military spending, increase the corporate tax rate by 10%, and reduce economic aid to foreign countries until our economy is back on track.

Interest rates are currently going up as determined by the Federal Reserve who monitors economic conditions and works to control inflation.

Interest rates should go back down gradually to 1% to stimulate the economy and get the U.S. back on a growth cycle. The stock market has been suffering with each increase, partly because investors can make a little more money in the bank. Borrowing is more expensive with higher interest rates and is slowing down of real estate sales in the Bay Area.