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Discussion - Impact of Low Interest Rates on Monetary Policy

Question # 00569028
Subject: Economics
Due on: 07/31/2017
Posted On: 07/31/2017 01:23 PM

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Discussion: Impact of Low Interest Rates on Monetary Policy
Since the end of the Great Recession, interest rates have been at historic lows—in some cases,
close to zero. How is expansionary monetary policy supposed to work? How do near-zero interest
rates limit the ability of expansionary monetary policy to work? 

Discussion Topic: Keynesian vs. Neoclassical Economics Thinking back to the business cycle discussion, how would Keynesian economists explain the
performance of the economy during the last few years? Show graphically using the AD/AS model,
and explain your reasoning.
Next, how would neoclassical economists explain the performance of the economy during the last
few years? Show graphically using the AD/AS model, and explain your reasoning.
Which interpretation makes the most sense to you? Why? 

Discussion: Economic Impact of Lower Corporate Tax Rate
Suppose Congress votes to decrease corporate income tax rates. Use the AD/AS model to analyze
the likely impact of the tax cuts on the macroeconomy. Show graphically and explain your
reasoning. What exactly causes AD and/or AS to shift? What happens to GDP and the aggregate
price level? Why?
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Discussion - Impact of Low Interest Rates on Monetary Policy

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Posted On: 07/31/2017 01:24 PM
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