1. Go to the Standard and Poor's website (http://www.standardandpoors.com) and click on "Ratings Actions". Find a country or corporation whose debt rating has recently changed. Explain briefly why S&P made the change. Please also include a printout of the information from the website.

2. Suppose someone makes the following statement:
"I just bought my first home in 2008. Economists are now projecting very low inflation in 2015 and continuing low inflation going forward. I really hope that they are incorrect."

Why would someone say this? Why does it make sense?

3. If the Federal Reserve increases the discount rate, what happens to the federal funds rate? Use the supply and demand analysis of the market for reserves to explain your answer. (You must DRAW out the graphs)

4. "The FOMC meets about every six weeks to assess the state of the economy and to decide what actions the central bank should take. The minutes of this meeting are released three weeks after the meeting; however, a brief press release is made available immediately. Find the schedule of minutes and press releases at www.federalreserve.gov/fomc/.

a. When was the last scheduled meeting of the FOMC? When is the next meeting?

b. Review the press release from the last meeting. What did the committee decide to do about short-term interest rates?

c. Review the most recently published meeting minutes. What areas of the economy seemed to be of most concern to the committee members?"

3. In the book The Big Short there are many things in the first 8 chapters that you may find shocking regarding the mortgage industry, mortgage bonds and/or the way Wall Street operates. Discuss three things from the first 8 chapters that you found surprising. Please discuss each somewhat in depth, identifying why it surprised/shocked you and what your initial opinion was of the event/policy.