Question

Should we call Ghostbusters or 911 (the emergency number), if the flow of money becomes sluggish within our macroeconomy? In this activity, you will explore the concepts of monetary policy, monetary policy tools, and expansionary and contractionary monetary policy.

Locate a recent article (published within the last year) that discusses the objectives of the Federal Reserve Banking System, monetary policy tools and how they work, and whether the Federal Reserve Banking System is using expansionary or contractionary monetary policy.

You can use the Hunt Library, newspapers, new stations, or other credible sources to locate an article. Analyze the article and then provide the following in your discussion.

• Define the term monetary policy tools.
• Explain how each monetary policy tool is used.
• Provide an example of a real-life application in which the Federal Reserve Banking System would use contractionary monetary policy over expansionary monetary policy.
• Discuss which monetary policy is used most often and why.

Summarize your findings using at least 250 words and provide a minimum of one reference. Use current APA formatting to document your sources.

*****ARTICLE NEEDS TO BE WITHIN THE LAST YEAR*****

Answer 1

Answer :

Article-The Fed -what are the Federal Reserves objectives.August 15, 2019.

The federal reserve system is the central bank of the US.It was created to to give the nation a stable ,flexible and safe monetary and financial system.

Monetary policy is the central bank's policy to control money supply in the economy.The tools of monetary policy are open market operations, reserve requirements, discount rate, interest on reserves. All the tools control the supply of funds in the economy.

Open market operations are when the Central bank buys or sells securities. When the central bank buys securities it gets more funds in the bank's reserves and when it sells securities there is less fund .It buys securities and this is expansionary monetary policy and when it sells securities it is contractionary monetary policy.

Reserve requirement is the amount of money banks keep with them.A low reserve allows banks to lend more and vice versa.The discount rate is the rate that banks charge their members to borrow.

The central bank would use contractionary monetary policy over expansionary policy when inflation threatens the economy in order to reduce the supply of money and to control loans and spending.

Open market operations is very flexible and the most frequently used tool of monetary policy.