here are the main topic:1- on aggregate supply2-interest rates3-money4-newspapers about Blinder...

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here are the main topic:1- on aggregate supply2-interest rates3-money4-newspapers about Blinder article and Vedder. the quiz open on February 5th from 2pm to 3:15pm.

Robert · Accepted Answer

1. Interest rates play a very important role in sustaining a healthy economy . government uses this 
Powerful tool to control the level of economic activity in an economy. It is done by a method of  
Quantitative easing ( buying bonds in the free –bond market ) or monetary tightening ( by selling  
Government bonds in the bond market ) . By regulating the money supply the government 
regulates the interest rates prevailing in the economy . an increase in money supply leads to a  
Decrease in the interest rates and a monetary tightening leads to an increase of the interest 
rates ( as borrowing becomes harder due to less cash availability ) . 
As most of the investment ( capital stocks ) is financed by borrowed money , a lower interest 
rate stimulates investment which stimulates investment demand in the economy which , 
according to Solow Model , leads to a larger long term output-per-capita and therefore larger  
Welfare.  
So , interest rates are paramount to the federal reserve bank .
2
Labor Demand or the Demand of Labor is governed by the Prices prevailing in the economy . 
Intuitively , an increase in a price level ,

here are the main topic: 1- on aggregate supply 2-interest rates 3-money 4-newspapers about Blinder article and Vedder. the quiz open on February 5th from 2pm to 3:15pm.

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