Question

Assume that you are attending a meeting of the Federal Reserve’s Open Market Committee (FOMC). There is great concern among the members that the U.S. economy is in a recessionary trend, while others believe that the U.S. economy is booming. Based on your reading, write a brief report to summarize your suggestions on how to adjust the current monetary policies. In your discussion, please specify the available tools that the Fed could use and how these policy changes affect your personal life and investment decisions.

Answer 1

a) The FOMC will take measures to animate the economy to avoid the impacts of downturn. The estimates it have to take are:

• Decrease save necessity for part banks

• Decrease the markdown pace of advances Lessening the objective rate for government reserves Purchase protections in open market to increment cash. This should be possible by expanding the rate

• Increase the measure of cash in flow. Should likewise be possible my printing more money .

• Invest in framework to give occupations just as have a suprrior infrastructure.

B)

FOMC would go to the open market to buy a monetary resource, for example,government bond, gold etc . The installment is finished by Fed by moving the bank stores to the dealer's bank and the sum is credited to the record of the dealer or seller ince banks additionally has a bigger number of stores than it had before, it can likewise loan out more cash also, increment the cash flexibly in the economy. This expansion in cash gracefully would invigorate the economy and would likewise bring down the loan fees in the economy, emphatically affecting Investment and hence GDP of the economy.