In 2007 and 2008 the Federal Reserve Open Market Committee voted to lower interest rates repeatedly


Think of this as an essay test. To complete the assignment, you will need to write a response to each question, then you can paste it right into the assignment submission area, or you may attach it in a Word document.


The criteria used to grade include the following:

 Professionalism – Does it look good and is it well organized and easy to understand?

 Thoroughness – Do you touch on the relevant concepts from what you’ve learned?

 Correctness – Are spelling and grammar correct?

 Basis in fact – Is the information correct?

 Logic – Does it make logical sense or is it contrary to fact or to itself?

The length of your response will depend on what is required for a thorough answer. Some of your answers (especially questions 2 through 5) may be helped by relating your ideas to some concept in the book.


1. (15 points) Use a current economic event or phenomenon, perhaps from one from your shared articles. Drawing on the things you have read, please do the following:

 Tell what is happening.

 Share some facts gathered to illustrate what is happening.

 Explain any proposed causes that have been put forward.

 Explain some of the effects of what is happening.

 In any of the above, you may want to explain any opposing positions or predictions offered by others.

 You may offer your own opinions or predictions if you want.

2. (10 points) In 2007 and 2008 the Federal Reserve Open Market Committee voted to lower interest rates repeatedly. Please explain:

a) Why the Fed would do this

b) How the Fed does this

c) Possible consequences on the economy of the Fed’s actions.

3. (5 points) Please describe the two main indicators of a recession and explain how they relate to one another.

4. (10 points) Describe what happens when government restricts a price so that it cannot reach equilibrium. This might be a price ceiling or a price floor. Be specific in relating this to the supply and demand curves. You may use hypothetical example (i.e. the price of milk, tractors, etc.) if that will help in your explanation.

5. (10 points) Microsoft has had ongoing legal issues for many years with the U.S. and the E.U. (European Union). There have been many lawsuits, battles with the Justice Department or other agencies, and agreements restricting certain behaviors. Why would these governments take such an interest in one company?