Use the following questions to stretch your understanding of the concepts learned in this unit. This will be a valuable resource when you prepare for the test.
Imagine you are the chair of the Federal Reserve. You are facing a number of challenges. For each problem, briefly explain what actions you would take, or what advice you would give to the president of the United States.
1. You are worried that the economy is facing a downturn. What actions can you take using the Federal Reserve?
2. The downturn continues. You call the president on the phone. What fiscal policies do you recommend?
3. Those policies worked so well that the economy is suddenly in a boom! How can you and the president work together to slow down this growth and prevent the economy from overheating?
4. It appears that these economic busts and booms are coming because of the actions of one of the nation’s largest trading partners. What foreign policy tools can the president and Congress use to convince that nation to change its policies?
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