Question

• Have the Federal Reserve’s countercyclical monetary policies been effective in moderating business cycle swings?

Answer 1

Yes this is true that the Federal Reserve countercyclical monetary policies have been effective in moderating business cycles wings.
Federal Reserve works on the selective monetary system, but sometimes when there is a change in the business cycle then definitely it will affect the Federal Reserve policies. In this case we have to study systematic business cycle swings which immediately affect the Federal Reserve system. Business cycle swings are basically affected with the market ups and downs.
Logically there are various factors on which the organizational market’s shares, stocks, investments and savings depends on certain conditions. This is the only reason there is a situation of inflationary and deflationary gap in the conversation. With this situation all the policies are changed and become moderate according to the fluctuations. Hence, Federal Reserve countercyclical monetary policies have been affected according to the inflationary and deflationary situation.