Concept explainers
A
To determine: The action taken by the U.S. Federal Reserve in order to pursue an expansionary
Introduction: The manipulation of the money supply and its effect on the interest rate is called as the monetary policy. The increment in the money supply and the decrement in the short term interest rate are the result of the expansionary monetary policy. The expansionary monetary policy also encourages investment and the consumption demand.
B.
To determine: The action taken by the U.S. Federal Reserve in order to pursue an expansionary monetary policy using Open market operations monetary tool.
Introduction: The manipulation of the money supply and its effect on the interest rate is called as the monetary policy. The increment in the money supply and the decrement in the short term interest rate are the result of the expansionary monetary policy. The expansionary monetary policy also encourages investment and the consumption demand.
C.
To determine: The precaution taken by the U.S. Federal Reserve in order to pursue an expansionary monetary policy using Discount rate.
Introduction: The manipulation of the money supply and its effect on the interest rate is called as the monetary policy. The increment in the money supply and the decrement in the short term interest rate are the result of the expansionary monetary policy. The expansionary monetary policy also encourages investment and the consumption demand.
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INVESTMENTS(LL)W/CONNECT
- How does the Federal Reserve conduct monetary policy?arrow_forwardIs it necessary for the Federal Reserve to communicate the strategy and objectives of its monetary policymaking to financial markets and the public effectively? What challenges will the Federal Reserve face in these communications? Please provide your reasons for the questions.arrow_forwardThe so-called “dual monetary policy mandate” of the Federal Reserve calls for setting conditions conducive to: (a) best stock market performance and lowest interest rates; (b) maximum sustainable real economic growth and highest stock market performance; (c) maximum employment and price stability; (d) maximum money supply growth and a safe and sound banking system.arrow_forward
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