The Fed recently adopted a policy called "quantitative easing".
Define quantitative easing (See pages 940-41 in the text.) The introduction of new money into the money supply by a central bank.
What specifically is quantitative easing supposed to accomplish? Use your own words and refer back to my discussion of the tools of monetary policy. It allows the central bank to purchase government securities or other securities from the market in order to lower interest rates and increase the money supply.
What is the "Zero Lower Bound Problem"? 5 points Sets limits to the power of monetary policy because interest rates can't go below zero.
Which of the tools (Reserve Requirements, Discount Rate or Open Market Operations) is the Fed using in this case-describe how this tool will accomplish the Fed's intended goal.
What could be some undesirable consequences of this policy?