Unit 7 Discussion  Discussion Topic        

How Money Affects the Economy

This  Discussion deals with the various forms and uses of money, the roles of  the Federal Reserve System, money supply, money demand, and monetary  policy instruments.

Read  Chapters 14 and 16, and remember to include references and links to the  websites that you feel are important contributors to your posts  (comments). 

The Federal Reserve may increase or decrease money supply depending on the economic condition.

1. What policy instruments does the Fed use for the monetary policy?
2. What  are the pros and cons of using expansionary and contractionary monetary  policy tools under the following scenarios: depression, recession,  inflation, and robust economic growth? Which do you think is more  appropriate today?

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