Zhe Sun
Giselle Rubi
Gilberto Rodriguez
Thinh Mai
Prof. Slotkin
03/31/16
Economics 1A Essay Questions Midterm #2

1. “A government whose bonds are widely held by the general public is less likely to face violent revolution.” Why might that be the case? Before we answer the first question, we must need to know what a “Government Bond” is. It is a debt security issued by a government to support government spending, most often issued in the country's domestic currency. Federal government bonds in the United States include: the savings bond, Treasury bond, Treasury inflation-protected securities (TIPS), and others. In my opinion, there are three main reasons for this question. Firstly, before
Firstly ,the Fed would lose its independence! Then its policy will become less sensitive to what’s going on in the real world and more of a hostage to people who know far less about designing and implementing monetary policy. Social scientists of all political persuasions no longer even debate the question of whether the central bank should be “independent.” They recognized the term refers only to how policy is implemented—free of political pressure—and that independence does not give the central bank the ability to set its own goals, as some lawmakers seem to think. secondly, Monetary policy is neither simple or fixed! The demand for an audit rests on the notion that there is a simple way to carry out monetary policy, as if there was one rule to follow. In the economics profession, the discussion of sticking to policy rules has quieted down as we learned, over and over again, that constant changes in the way people and companies behave and continuous innovation undercut the foundation for rigid rules. Thirdly ,Congress reveal the Fed was responsive and flexible. They may have had long debates, but the meetings did not last for weeks or even several days. Recent data and comparisons with other countries suggest this willingness by Fed policymakers to try something never used before in the US was the right call. Finally, there’s always been this tug of war between politicians who typically want to juice up the