Question

What role did QE play in the Fed's response to the Great Recession? How did QE impact 1) The composition of the Fed's balance sheet 2) The Fed's profits? What forms of unconventional monetary policy has the Fed pursued in response to the pandemic? Do you believe these actions have been effective so far? Why or why not?

Answer 1

Quantitative easing has led to support the following economy at the time of great recession because quantitative easing will mean that the Federal Reserve had tried to enter into to all such measures in order to to counter the adverse impact of recession when the interest rate cutting did not work.

Quantitative easing impact in stimulation of demand in to the economy and it also supported a falling economy by cutting out the losses of various organisation and maintained liquidity in the entire system and saved it from completely collapsing.

The federal balance sheet has increased and it meant that Federal balance sheet will be having more of the debt and the profits of the Federal Reserve lower.

Federal Reserve and tried to implement zero interest rate policy along with cutting down on the interest rates to find negative zone if required and federal reserve also provided various bailout package and active actively engaging in in mergers and acquisitions between various private interprises in order to save from any kind of financial contagion.

Actions of Federal Reserve has been effective till now because it has started an impending recession which were almost there but it try to provide the economy with liquidity injection and support which delayed and impending recession but is still around the corner because the economy cannot always run on a stimulus