Considering the Federal Reserve's aggressive
expansionary monetary policy since the beginning of the Great
Recession in 2007, and the latest stance on Monetary Policy to
maintain the accommodative policy of a target Federal Funds Rate
(FFR) at 1-1.25% interest rates while beginning the balance sheet
normalization program...
A) What are the predicted effects on GDP and on inflation?
B) How is the stock market reacting?
C) What are the "labor market supports" anticipated?
D) How much upward pressure on prices...
Discuss how changes in the Federal Reserve’s monetary policy
affect at least 1 of the 4 components of GDP (consumption,
investment, government spending, net exports).
Have the Federal Reserve’s countercyclical monetary policies
been effective in moderating business cycle swings? Justify your
response.
Discuss how changes in the Federal Reserve’s monetary policy
affect at least 1 of the 4 components of GDP (consumption,
investment, government spending, net exports).
Have the Federal Reserve’s countercyclical monetary policies
been effective in moderating business cycle swings? Justify your
response.
a) Show the changes to the balance sheets for commercial banks
when the Federal Reserve buys $50 million in US Treasury Bills. If
the public holds a fixed amount of currency ( so that all loans
create an equal amount of deposits in the banking system), the
minimum reserve requirement is 5%, by how much will checkable bank
deposits in commercial banks change?
b) Now suppose that the Fed raises the discount rate
significantly. How would you expect this to...
Show the changes to the balance sheets for commercial banks when
the Federal Reserve buys $50 million in US Treasury Bills. If the
public holds a fixed amount of currency ( so that all loans create
an equal amount of deposits in the banking system), the minimum
reserve requirement is 5%, by
how much will checkable bank deposits in commercial banks
change?
b) Now suppose that the Fed raises the discount rate
significantly.How would you expect this to affect the...
3. Why do central banks use monetary policy? What kind of
monetary policy do central banks take when an economy is in
recession? Name any two tools/activities by central banks to
exercise the policy. How do these tools/activities help? Why don’t
they always do that?