Macroeconomics Discussion Questions With Sample Answers

Discussion Board 1

You have been tasked to brief the firm’s finance team on an aspect of international finance and then to lead a discussion with the team.  This briefing is particularly important because of the global financial crisis that began in 2007. The briefing is needed to provide more foundation for the finance team because they are not well versed in the international aspects of finance.
Provide a briefing that addresses the following:
  • Describe when and why central banks buy either their own currency or the currency of another nation in an effort to control exchange rates.
  • What did the central banks do to stabilize the financial systems in 2007–2009?
    In an effort to stabilize the financial system how much money, in U.S. dollar equivalent and as a percentage of the country’s GDP, did the European Central Bank, Bank of England, Bank of China, and the Federal Reserve put into the economy in 2008 and 2009?
  • How well did each country’s efforts work at stabilizing the economy?
  • What appears to be the major constraint that the central banks used to determine the limits of the monetary injections into the economy? Did the United States use the same or different criteria?
  • To what extent to do you agree/disagree with the actions of the central banks during this time?

Discussion Board 2

What do monetarists think are the short-term effects and the long-term effects of using discretionary monetary policy to smooth out economic fluctuations caused by the business cycle? What is their advice for controlling the money supply?

Discussion Board 3

Can the government always reduce the budget deficit by simply increasing taxes? Why or why not? Please explain your answer using the Laffer curve. In addition, use research and show historical examples to illustrate your answer.

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