If you were an economic adviser at the Fed, what should be the monetary policy in...

If you were an economic adviser at the Fed, what should be the monetary policy in the next six months-expansionary (continued low-interest rates and/or additional QE) or contractionary (starting to slowly raise interest rates)?

Expert Solution

Solution

In the current scenario the Corona virus outbreak will have an adverse effect on the US economy.The demand and supply side both will be hit .There will also be a decrease in growth projection for GDP.If this scenario continues for some time market can enter a recessionary phase and it will also lead to unemployment issues

Therefore it is imperative that similar to 2008 crisis the interest rates be kept between 0 and .25 so that more people take loans and invest in business ,increase purchasing so that it spur economic activity and also help in increasing emplyement.

Secondly due this outbreak there will be liquidity issues in market so it is imperative that liquidity is injected in the system .This can be done if the fed buys securities and other financial instruments from the market .This will further help in increasing the economic activity.

Thus as an advisor I would suggest to hold the rates between 0-.25 and also go in for Quantitative easing

Rahul Sunny answered 7 months ago

If you were an economic adviser at the Fed, what direction should monetary policy go in...

If you were an economic adviser at the Fed, what direction should monetary policy go in the next six months – expansionary (as in continued zero-interest policy and additional QE), or contractionary (as in start slowly raising interest rates)?

what are the main monetary tools the Fed uses? How does monetary policy affect key economic...

what are the main monetary tools the Fed uses? How does monetary policy affect key economic variables?

The Fed initiates a contractionary monetary policy that is correctly anticipated by economic agents in the...

The Fed initiates a contractionary monetary policy that is correctly anticipated by economic agents in the economy. The result is decreased prices, but no change in real GDP. decreased real GDP in the short run and decreased prices in the long run. decreased real GDP and prices in both the short run and the long run. decreased prices and decreased real GDP in the short run, but only decreased prices in the long run.

Discuss the FED monetary policy with respect to the current economic situation at the domestic and...

Discuss the FED monetary policy with respect to the current economic situation at the domestic and international levels. Imagine being an economic consultant of the FED and advise the chairman with the best monetary strategy for the next year in less than 500 words. Support your viewpoint with data, analyses and empirical evidence.

What policy instruments does the Fed use for the monetary policy? What are the pros and...

What policy instruments does the Fed use for the monetary policy? What are the pros and cons of using expansionary and contractionary monetary policy tools under the following scenarios: depression, recession, inflation, and robust economic growth? Which do you think is more appropriate today?

Assume that you are an economic policy adviser, and the government has asked you to prepare...

Assume that you are an economic policy adviser, and the government has asked you to prepare a report on the issues to consider in the provision of tertiary education. In particular, you are asked whether the government should fully subsidise tertiary education, partially subsidise tertiary education, or move to a full-fees system where students pay the full cost of their education. Discuss the factors that you should consider.

Assume that you are one of Fed governors working with Fed Chairman Powell on monetary policy....

Assume that you are one of Fed governors working with Fed Chairman Powell on monetary policy. What will be your advice on interest rates to him? Would you decrease the Federal Fund Rate in the coming months with a concern that the economy is in a recession?

The Fed uses monetary policy to affect the supply and demand for money. The monetary policy...

The Fed uses monetary policy to affect the supply and demand for money. The monetary policy affects interest rates, aggregate spending and economic growth. Discuss whether the Fed’s policies have the power to prevent recessions. Should the Fed intervene to prevent recessions? please do not plagiarize.

How does the Fed implement monetary policy?

Choose two expansionary monetary policy actions that the FED has taking recently to counter the economic...

Choose two expansionary monetary policy actions that the FED has taking recently to counter the economic impacts of the corona virus. How are the policies supposed to help?

Question