Question

Please choose one of the following two scenarios and explain, as a member of the Federal Open Market Committee, what you propose to do and what additional information you need to make a better decision. (Remember that the FOMC makes decisions like this given partial information.)

1. The economy is in the midst of a long recession, and there doesn't appear to be any sign of relief.

   or

2. A major hurricane along the Atlantic coast has devastated thousands of Florida homes (or a mudslide damaged thousands of homes in San Francisco Bay Area).

Answer 1

I choose the first one that is the economy is in midst of long recession and there doesn't appear to be any sign of relief.
As a part of federal reserve the federal government made many federal operations for the optimum satisfaction the dollar currency demand and supply in the economy. As the federal open market operations means buying and selling of securities for controlling inflation in the economy and controlling the money supply in the economy.so the federal reserve buy or sell securities in open market and ensure currency to the bank and the public.Normally federal reserve maintain purchasing the securities more than sale. But this situation like covid -19 the federal open market committee decided to bulk selling of securities in the open market and giving money to the bank for the economy recovery. Nowadays they only collect the money and dealing with debt securities only and also investing to mortgage loan areas also.
Under my opinion the securities repurchase within corresponding time and best securities purchasing time now and the decision of over selling in the securities in the open market not much favourable in future and also the money collected from other source is better choice.because the currency supply availability an importent factor. But more selling in the securities not at all a better decision.