Monetary Policies

1. The Federal Reserve can in effect expand or contract the supply of money in the US.

a. Explain what you think the Fed must do to expand the money supply.

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b. Identify 2 reasons why the Fed would do this.

2. Is it possible that the Fed, since it supposedly acts independently of the US government, could use monetary policies (expanding or contracting the money supply) in order to benefit only the wealthiest corporations and individuals while ignoring the lower classes? Explain your opinion here in detail.

3. Explain your opinion as to whether you feel that using a central bank (the Fed) to control all of the US’s major monetary policies as well as all of its money is dangerous? What might be some of the unintended consequences of giving this much power to one private entity?

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