EBK MACROECONOMICS
10th Edition
ISBN: 9780134896571
Author: CROUSHORE
Publisher: VST
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Chapter 12, Problem 10RQ
To determine
To know:
Reason for maintain credibility by Federal Reserve and gains for public of Federal reserve maintain credibility.
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During the early months of the pandemic, the inflation rate fell well below the 2% target which would have alerted the Federal Reserve Bank to take action. Why was that the case? Did the Fed have anything to do with that process?
Some people argue that the most powerful person in the world is the Chair of the Federal Reserve. What are some of the valid arguments for this viewpoint? What “power” does this person hold and why is it potentially so important? Who is the current Chair of the Federal Reserve?
text: Schiller, B. R., & Gebhardt, K. (2016). The economy today (14th ed.). Columbus, OH: McGraw-Hill Higher Education.
what role does independence play in the Fed’s ability to maintain its control in performing its mandates?
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- Would you say central banks are more reactive than proactive?arrow_forwardIvan Pongracic explains how the Fed may have been responsible for prolonging the Great Depression. Read the article on this website http://www.fee.org/the_freeman/detail/the-great-depression-according-to-milton-friedman. Explain Milton Friedman's theory about the cause of the Great Depression. How does this impact your understanding about what policy solution would have been best to get the economy going again?arrow_forwardThere was a temporary increase in the price of oil. Why does an increase in price of oil pose a dilemma for the monetary authority (Fed)?arrow_forward
- Which of the following are objectives that the Federal Reserve tries to achieve when setting monetary policy? Check all that apply Economic growth Price stability Zero inflation Interest rate stabilityarrow_forwardWhen Congress established the Federal Reserve in 1913, what was its main responsibility? When did Congress broaden the Fed's responsibilities?arrow_forwardWhat three steps has the Fed taken over the last 25 years to increase credibility?arrow_forward
- The Chairman or Chairlady or Fed Chair (a politically correct term) of the Federal Reserve Bank has the power to override the votes of the FOMC and can independently carry out the monetary policy that they want as an individual. The FOMC is merely an advisory board to the Fed Chair. The FOMC has no real power, it's the Fed Chair (currently Jerome Powell) who has 100 percent of the power over U.S. monetary policy.arrow_forwardAt the time of the writing of the chapter titled, "The Federal Reserve," in the Naked Economics book (2019 edition) the Chair of the Federal Reserve was: Group of answer choices Ben Bernanke Jerome Powell Paul Krugman Alan Greenspanarrow_forwardThe former chairman of the Federal Reserve, Alan Greenspan, used the term "irrational exuberance" in 1996 to describe the high levels of optimism among stock market investors at the time. Stock market indexes such as the S&P Composite Price Index were at an all-time high. Some commentators believed that the Fed should intervene to slow the expansion of the economy. Why would central banks want to clamp down when the economy is growing?arrow_forward
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