Question

Introduction: You have learned that the Federal Reserve Bank uses 3 main tools to conduct monetary policy in times of crisis. It can change the interest rate, it can change the reserve requirement, and it can change the discount rate. Additionally, the Fed can use emergency tools, such as quantitative easing. In this discussion, participants will find articles on the Federal Reserve Bank's response to the COVID-19 crisis, then discuss the pros/cons of this response from an economic perspective.

Post:

• a citation of the article that your found related to the Federal Reserve Bank's response you found
• two-paragraph summary of the main points of the article
• relate the article to one concept you learned in this module and the last
• if you would like, comment on the most surprising/interesting aspect of the bank's response

Answer 1

Article is - what fed doing in response to the COVID 19 crisis and what more it could do.

in the article , there is mention mainly about the monetory tools policy and fiscal tool policy used by the bank at different pace to reduce the pressure created by the calamity on the economy.in the article there is detail about the particular funtion .in the article it is mentioned that fed had increased its lending, declared the relief funds for the household, corporate sector providing further employment to the other sectors also pumped money in the banks to increase the money supply.

in the artixle details of policy is mentioned that fed has decreased its bank and repo rates thus giving more loans and thus increasing household individuals to take the money.

also fed had purchased lost of bonds and securities from the market so that they can push money in the market.

what more can fed do:

fed can increase the range for the lending of loan categoies

there is requirement of more relief fund to be pushed into the market

and need to low the interest rate more and keep it low till the economy strengthens again.

there is many pros and cons:

pros are that with all this there is hope in markets that sooner or later but they will recover and also helping lot of survivours with the livelihood.

cons are that with all the money pushed few sectors are might be increasing from losses but few are being hunted by high prices due to inflation caused by flow of money or speculative options are being opend too.

according to us, there must be proper strategy,

they must declare more relief fund and kee the interest rate low but on the other hand wit which sector there is inflation that sctor can be categorised for more tax in terms of tax for claimimng the covid19 fight.

this will help economy to balance with money in market and control of inflation from the booming sectors or from the sectors who are trying to use the situation and discriminiating the buyers for essentiales with high prices.