Macroeconomics 11th Edition by Michael Parkin

Exercise 31

Bernanke Warns of High Budget Deficits
The government must rein in budget deficits in the years ahead, Federal Reserve Chairman Ben S. Bernanke told Congress.
a. Does the Fed Chairman have either authority or responsibility for federal budget deficits?
b. How might a federal budget deficit complicate the Fed's monetary policy(Hint: Think about the effects of a deficit on interest rates.)
c. How might the Fed's monetary policy complicate Congress's deficit cutting(Hint: Think about the effects of monetary policy on interest rates.)