QUESTIONS AND APPLICATIONS
1. Impact of Monetary Policy: How does the Fed's monetary policy affect economic conditions?
2. Trade-offs of Monetary Policy : Describe the economic trade-off faced by the Fed in achieving its economic goals.
3. Choice of Monetary Policy : When does the Fed use a loose-money policy, and when does it use a tightmoney policy? What is a criticism of a loose-money policy? What is the risk of using a monetary policy that is too tight?
4. Active Monetary Policy : Describe an active monetary policy.
5. Passive Monetary Policy: Describe a passive monetary policy.
6. Fed Control: Why may the Fed have difficulty controlling the economy in the manner desired? Be specific.
7. Lagged Effects of Monetary Policy : Compare the recognition lag and the implementation lag.
8. Fed's Control of Inflation: Assume that the Fed's primary goal is to reduce inflation. How can it use open market operations to achieve this goal? What is a possible adverse effect of such action by the Fed (even if it achieves the goal)?
9. Monitoring Money Supply: Why do financial market participants closely monitor money supply movements?
10. Monetary Policy during the Credit Crisis: Describe the Fed's monetary policy response to the credit crisis.
Attachment:- Questions and Applications.rar