Question

The past few weeks have seen unprecedented action in terms of both fiscal policy initiatives and monetary policy initiatives. In terms of size, timing, and coordination this is the fastest and strongest both entities have acted to 'alter' the economy. Please take some time to read 3 or 4 articles if you are not familiar with these actions. Briefly summarize 5 fiscal policy initiatives put in place recently, and what the Fed did in terms of Monetary Policy. This week you only need to be brief in your summary, next week we're going to look at these in more detail.

Answer 1

Answer

Due to the current situation of Corona Virus outbreak, a lot of Fiscal and Monetary policy initiatives are being taken up. They are as follows:

Fiscal Policy initiatives-

1. Providing paid sick leave and free coronavirus testing, expanding food assistance and unemployment benefits, and requiring employers to provide additional protections for health care workers.

2. $1,200 direct cash payments to individuals, plus $500 per child. It also extended unemployment benefits and increased weekly payments,

3. Delayed the 2019 tax-filing deadline by 90 days and

4. Suspended federal student-loan payments, with no interest, for six months.

5. $500 billion of loans and funds for assisting larger corporations hit by the coronavirus disruption, including airlines. Finally, it provided additional funding to the CDC, hospitals, nursing homes, and state and local governments to put toward combating the virus.

Federal Reserves's Monetary Policy changes-

The target of Fed is basically to bring as much liquidity in the economy as possible. The steps taken therefore are:

The Fed established several lending facilities: the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, the Money Market Mutual Fund Liquidity Facility, and the Term Asset-Backed Securities Loan Facility.

Other Fed actions include boosting the size of its daily overnight repurchase operations, cutting the discount-window rate and allowing banks to borrow from it for 90 days, and reducing reserve requirement ratios to zero.