Hey guys, I'm new here and have some questions from my class. I'm kinda stumped on them and would like to ask you guys on your opinions. Here they are: You are watching a presidental debate. When a candidate is questioned about his/her position on economic growth, the presidental candidate steps forward and says "We need to get this country growing again. We need to use tax incentives to stimulate savings and investment, and we need to get the budget deficit down so that the goverment stops absorbing our nations savings." 1. If government spending remaining unchanged, what inconsistency is implied by the presidental candidate statement? 2. If the candidate truly wishes to decrease taxes and decrease budget deficit, what has the candidate implied about his plans for government spending? Suppose you are a friend of Ben Bernanks, Fed's chairman. He comes over to your house best lunch and notices your couch. Mr. Bernanks is so "struck" by its beauty that he simply must have it for his office. Mr. Bernanks buys it from you for $1000 and since it is for his office he pays you with a check drawn from the federal reserve bank of New York. 1. Are there more dollars in the economy than before? Why? 2. If the fed wishes to change the money supply, why do you suppose that the fed doesn't buy and sell couches, real estate, and so on? 3. If the Fed doesn't want the money supply to rise when it purchases new furniture, what might it do to offset the purchase? Any help would be greatly appreciated. Thanks!