ECO 372 – WEEK 3, DQ 1-3
DUE THURSDAY (12/15/2011)
1. What are the uses of money? How do banks create money? Is monetary policy conducted independently in the US? Is the intended effect achieved? Why or why not?
2. What are the advantages and disadvantages of adjustable-rate versus fixed-rate mortgages? Identify the conditions that make adjustable and fixed-rate mortgages favorable to lenders and borrowers. Which would you suggest for a home buyer at this time?
3. What is the difference between contractionary and expansionary monetary policy? What are the pros and cons of using contractionary and expansionary monetary policy tools under depression, recession, or robust economic growth? Which is more appropriate today?