Final article review

SECTION B: ANSWER ALL QUESTIONS Using an appropriate diagram(s), explain the concept of direct and indirect finance. As a student of International Finance and Monetary Policy, explain the monetary policy approach the Central Bank should take when it wants to increase the GDP. Offer the tools that are available and the consequences, if any. Explain the theory of money demand and its relation to inflation in the economy. Use an appropriate equation to demonstrate this. Explain the concept of moral hazard in relation to financial systems.

Monetary policy For the first time since 2006, the Federal Reserve voted to raise interest rates by a one-quarter percentage point in December 2015.  Prior to this increase, interest rates had remained between the 0.00% - 0.25% range, an area called “the zero lower bound.”  The Federal Reserve had driven interest rates down that low as a means of helping the economy get back on its feet after the Financial Crisis.  The reasoning was that consumers and businesses needed access to loans so that production could turn around.  (Consumers take out loans to buy high price items like cars and homes.  Businesses use loans as a means of expanding their business.  In both instance, more goods will be produced.)  The increase in 2015 moved rates to the 0.25% - 0.50% range.  As of October 2018, interest rates have moved to 1.00% - 1.25% range.  For this discussion board, I want you to do some research into the “Financial Crisis.”  Why did it occur?  Can you characterize the behavior of the…

There is a growing concern among tax payers that ‘too big to fail’ (TBTF) creates moral hazard problems and leads to excessive risk-taking and reckless investment decisions by large financial institutions. This unfortunately exposes the tax payer and the economic system to excessive cost. What are the issues surrounding “too big to fail”? Is it possible for the legislative authority to simply “outlaw” TBTF institutions? Why or why not?

From an economics standpoint, the main benefit of a healthy banking industry is the fact that     banks themselves make a tremendous profit, allowing the owners of banks as well as their employees to have high incomes.     banks force entrepreneurs to pay high interest rates, which contributes to solving the problem of wealth inequality.     banks are able to minimize asymmetric information and adverse selection problems, which allows them to transfer idle funds to more productive ends in a cost-efficient manner.     private banks help keep inflation under control.

How are monetary and fiscal government policies being affected by this corona virus pandemic ? And give examples

Below are given two cases showing the relationship between leverage growth and total assets growth drawn from the U.S. flow of funds data over the period 1963- 2006. Identify these two cases among the following alternatives: (1) households (2) non-financial, non-farm corporates (3) commercial banks (4) security brokers and dealers giving reasons for these relationships (negative, positive or no relationships) in both cases.

In the 2017 UN working paper entitled "On the Role of Central Banks in Enhancing Green Finance," the UN stated that central banks would have what kind of role in addressing environmental concerns? Central banks would need to develop sustainability targets and governments would create new policy tools to meet those targets. Central banks would need to develop sustainability targets and create new policy tools to meet those targets Central banks would need to develop sustainability targets as their new primary goal. Central banks would need to enforce regulations at commercial banks regarding environmental goals

Define “financial frictions” in your own terms

To support economic growth, the Indonesian government is committed to making the Islamic economy a source of national economic growth, one of which is through Islamic banking. In general, the form of a sharia bank business consists of a Commercial Bank and a Sharia Rural Bank, with a number of main differences. Banks are basically entities that collect funds from the public in the form of financing or in other words carry out the function of financial intermediation. There are a number of differences between Islamic Commercial Banks and BPRS. Explain what you know the differences in the bank!

What were the two previous central banks the United States had before the current Federal Reserve system? When was the Federal Reserve established? How old are some other central banks in other countries? Describe in detail how the Federal Reserve is structured and explain how it is mostly independent from political interference? Using ideas like supply and demand, explain how the Federal Reserve uses open-market operations to either raise or lower interest rates at the direction of the Federal Open Market Committee (FOMC). See if you can find what the most recent decision made by the FOMC was concerning interest rates and explain how that will be reflected in its open-market operations.

Which of the following is a difference between "quantitative easing" and ordinary open-market operations? Multiple Choice O There is no difference between the two policy tools. Open-market operations are focused exclusively on U.S. government bonds; quantitative easing also includes the buying and selling of debt issued by government agencies and government-sponsored entities. Quantitative easing is done in order to lower interest rates; open-market operations are merely intended to increase bank reserves Open-market operations involve forward commitment, quantitative easing is intentionally vague to maintain flexibility

In 2007-2009, The US experienced a serious housing and financial crisis that took almost 10 years to recover. In the first discussion forum, we will discuss the following questions.   1. What is a bank run? What is the purpose of the Glass-Steagall legislation?

Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

1) https://openstax.org/books/principles-macroeconomics-2e/pages/15-1-the-federal-reserve-banking-system-and-central-banks 2) https://openstax.org/books/principles-macroeconomics-2e/pages/15-2-bank-regulation 3) https://openstax.org/books/principles-macroeconomics-2e/pages/15-3-how-a-central-bank-executes-monetary-policy please I need a short summary for these articles.

https://www.investopedia.com/ask/answers/033115/how-does-law-supply-and-demand-affect-prices.asp#:~:text=There%20is%20an%20inverse%20relationship,quantity%20of%20goods%20and%20services. review the following article found in Investopedia, Kramer, L. (April 29th, 2021). How does the law of supply and demand affect prices? Investopedia. Most goods respond to the relationship between price, supply, and demand. What happens when price controls are put in place such as for gasoline in the 1970s? Why? When does the Fed reduce interest rates and why? When does the Fed increase interest rates and why?

b) discuss how monetarists and keynesians view the role of government in relation to market intervention.

What factors may reduce the banks’ dominance in the future? Prove explanations in detail with an example

Give True or False: Credit rationing is quantitative credit control measure of Central bank.

Most legal systems assume that it is better not to incarcerate a guilty individual than to incarcerate an innocent person (i.e., if you are making a mistake, at least choose the least bad one). As central banks can potentially make a mistake when bursting asset-price bubbles, which of the following support the statement: "it is worse to burst a bubble when it was not necessary then not bursting a bubble when it was needed to." a) because central banks have many policy tools to counteract the effect of a price bubble burst, it is usually considered wiser to leave bubbles alone and eventually act if needed. b) The worst mistake would be to burst a bubble when it was not necessary because the central bank may impose harm to the economy when it was not necessary. c) Most central banks are quite conservative with respect to taking actions against asset-price bubbles since they cannot guarantee a price bubble has occurred. d) All of the above.

"While the subprime mortgage market crisis triggered the GFC, the real cause was the Clinton administration repealing the Glass Steagall act." State True or False and justify your answer as a short essay answer.