Distinguish between liquidity and solvency.
1- Distinguish between liquidity and solvency. Why are banks vulnerable to liquidity problems and how can a liquidity problem change into insolvency? How can the Fed prevent this from happening?
second essay:
2 - Discuss the tools and effectiveness of monetary policy under different economic conditions. Describe how Fed uses these tools under normal economic conditions and currently. Do you think that the Fed will succeed in its current efforts to stabilize the economy. How would you know that the Fed had been successful in achieving its policy objective(s)?