Question

In: Economics

a) The central bank is the lender of the last resort in any country. Why did...

  1. a) The central bank is the lender of the last resort in any country. Why did Fed chairman Jerome Powell said “This is the time to use the great fiscal power of the United States to do what we can do to support the economy and try to get through this with as little damage to the longer-run productive capacity of the economy as possible’ on April 29, 2020 ? ( WSJ, April 29, 2020)

  1. Use the IS, LM curve to show under what conditions the monetary policy will be totally ineffective. Why ?

  1. When monetary policy is ineffective, what kinds of policy does the Fed do?

Solutions

Expert Solution


Related Solutions

Why did the Federal Reserve fail to act as a lender of last resort during the...
Why did the Federal Reserve fail to act as a lender of last resort during the Great Depression, and why did the Fed allow the money supply to contract and prices to fall by so much?
5. What is the lender-of-last-resort function of the central bank in modern economies? What is its...
5. What is the lender-of-last-resort function of the central bank in modern economies? What is its justification? Should commercial bank borrowing from the central bank be a privilege or a right? Discuss.
When it is said that the Fed is the lender of last resort, what does that...
When it is said that the Fed is the lender of last resort, what does that mean? What is the name that we give to interest rate charged by the Fed to banks?
Since most individual countries recognise the need for a National ‘Lender of Last Resort’, why has...
Since most individual countries recognise the need for a National ‘Lender of Last Resort’, why has it proved so difficult to agree on an International ‘Lender of Last Resort’? How has the absence of an international lender been dealt with and with what success?
Financial Instability and Lender of Last Resort Discuss the Minsky’s financial instability hypothesis. Why and how...
Financial Instability and Lender of Last Resort Discuss the Minsky’s financial instability hypothesis. Why and how does financial crisis arise? According to the Keynes-Minsky theory, discuss the role of the central bank in times of financial crisis.
The Fed, as lender of last resort, provides a critical service by reducing the likelihood of...
The Fed, as lender of last resort, provides a critical service by reducing the likelihood of bank panics. However, its role as lender of last resort could actually increase the likelihood of a financial crisis. Why is this?
Explain the issues involved with the Fed acting as a Lender of Last Resort (LLR). Explain...
Explain the issues involved with the Fed acting as a Lender of Last Resort (LLR). Explain the concept of Moral hazard and its impact
IMF is also known as the “lender of last resort”. What does that mean? Please give...
IMF is also known as the “lender of last resort”. What does that mean? Please give us an example.
Suppose country A has a central bank with full credibility, and country B has a central...
Suppose country A has a central bank with full credibility, and country B has a central bank with no credibility. How does the credibility of each country’s central bank affect the speed of adjustment of the aggregate supply curve to policy announcements? How does this result affect output stability? Use an aggregate supply and demand diagram to demonstrate.
Define the following concepts (i) Liquidity crisis (ii) lender of the last resort (iii) shadow banks
Define the following concepts (i) Liquidity crisis (ii) lender of the last resort (iii) shadow banks
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT