Assignment:
Read Chapters 15 and 16. Given the information therein plus that gleaned from at least four cited sources which explain Quantitative Easing, write a four page double spaced explanation of recent Federal Reserve policy. Use of graphs as part of the explanation will be looked upon quite favorably. Here are some questions to be addressed:
Question 1. What is the objective of recent Monetary Policy?
Question 2. Has it been effective? Give arguments that say it has and some which say it hasn't.
Question 3. If excess reserves are abnormally high why would that be and what are the dangers to the economy of high levels of excess reserves?
Question 4. What would likely happen to the price level if banks decided quite suddenly to lend out all of the excess reserves during a very short time period? Graphically illustrate as part of the answer.
Question 5. What has been the impact of recent monetary policy on the value of the dollar relative to other major world currencies and what are the economic consequences for international trade?
Question 6. Assume you are on the Board of Directors for the Federal Reserve. What would your recommendation(s) be for near-term monetary policy and why? How would fiscal policy likely be impacted by your recommendations? Give supporting documentation upon which your recommendation(s) are based.
Attachment:- Monetary Policy.rar