DeVry University

Principles of Economics

Money and Banking (graded)

What factors led to the mortgage default crisis? How did mortgage defaults affect banks involved in mortgage lending and mortgage investing? Securitization? TARP? What do these mean? How did mortgage-backed securities spread losses during the mortgage default crisis? How does TARP illustrate the problem of moral hazard? What did the Federal Reserve do during the financial crisis of 2008 and 2009? How did the recent financial crisis affect the financial services industry? What are some of the major provisions of the Wall Street Reform and Consumer Protection Act?

1. So, why did all of this get started in the first place? What law or rule changed that allowed this to happen?

Monetary Policy and the Federal Reserve (graded)

What is the Federal Reserve (Fed) all about? Which Federal Reserve District Bank is closest to you? Who is the current Chairman of the Fed? Should the Fed remain independent from political authority or should the President and Congress have a say in their operations? Why? Why not? What is FOMC? What is the current Federal Funds Rate? How does the Fed implement monetary policy to manage the economy? At the last meeting of the FOMC, what was done to the federal funds rate–increased, decreased, or no change from previous meeting? Given the current state of the U.S. economy, should the Fed be using expansionary monetary policy or contractionary monetary policy? Why? Why Not?

This second discussion question is more about what the Fed, what it does and what it ought to be doing. What policies should the Fed put into place and what are some of the consequences of the various policies?

2. In addition to the open market operations that you mentioned in your post, what other tools does the Fed have to influence money supply growth?