Econ extra credit

You may answer up to two of the extra credit question. Indicate the number of the question that you are answering.

Type your answer in the text box provided. Answer all of the extra credit questions in the same text box.

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Extra Credit # 1

During the Great Recession which deepened after the financial crisis of 2008-9, the Federal Reserve employed an array of unconventional monetary policy actions in an attempt to halt the contraction and rejuvenate the economy.
a) Define conventional monetary policy and explain how the Fed typically uses it to manage the US macroeconomy.
b) Explain why conventional monetary policy ceased working after the financial crisis in 2008-9.
c) List three unconventional monetary policy actions taken by the Federal Reserve and explain how these actions promoted economic recovery.

Extra Credit # 2

Economists call the Romer Model a model of endogenous economic growth. The Solow model is a model of exogenous growth. Please write an essay explaining why growth is endogenous in the Romer model and why it is exogenous in the Solow model.

Extra Credit # 3

Our model for the quantity theory of money indicates that by changing the growth rate of the money supply, the central bank can only influence the price level and rate of inflation in the long run. Our short-run model of the economy indicates that by changing the real interest rate, central banks can influences both the rate of inflation and economic output. What are the differences between the models that allow them to reach such different results?

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