Thursday, November 22, 2012

Exam Question of the Day: On the Anniversary of Helicopter Ben

Today’s exam question is set by Addison Wiggin:

Ten years ago today, a relatively unknown U.S. Federal Reserve governor named Ben Bernanke delivered what might be the most famous speech in the history of monetary policy. In an address to the National Economists Club, he said: “The U.S. government has a technology called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
In the speech, Mr. Bernanke invoked Milton Friedman’s idea that the Fed and Congress could simulate dropping dollar bills from a helicopter to stimulate “aggregate demand.”
Ouch.
Ten years on, we pose a simple question, not to Bernanke, but to you: How’s it working out?

This question is worth ten marks. Please show all your working.

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4 Comments:

Blogger twr said...

This comment has been removed by the author.

11/22/2012 01:34:00 pm  
Blogger twr said...

Ten Marks will be much more valuable than ten euros in the near future...

11/22/2012 01:34:00 pm  
Anonymous B Whitehead said...

Increase supply of money, therefore reduce value of money as a whole.
Inflation goes up as a result, due to costing more to import,
Other bad things happen after that.
Result: economy goes down toilet. eg Zimbabwe

(that must be good for 6 marks surely)

11/22/2012 03:39:00 pm  
Blogger libertyscott said...

Russel Norman believes it, so it must be right, he being the pinnacle of reason and economic intelligence.

11/22/2012 09:43:00 pm  

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