Engaged in expansionary monetary policy

Assignment Help Business Economics
Reference no: EM131161900

Since the beginning of the Great Recession, the Federal Reserve Bank has engaged in expansionary monetary policy (buying U.S. Treasury bonds) with the goal of promoting economic recovery. Most Americans think that when the Federal Reserve buys these securities, they must "get the money" from somewhere. Actually the Federal Reserve Bank has the perfect "money tree" because it is able to simply create "new money". That means it doesn’t actually need to have "the money" when it purchases securities. The Federal Reserve simply writes a check or does a wire transfer to the seller of the security. Very often, this is the U.S. Treasury who has just created new bonds in the deficit! At this point there is newly created money. No Federal Reserve account with "money in it" somewhere is decreased as a result of the bond purchases.

As children we were often reminded by parents, there is no money tree in the backyard. But that's not true if you are the Federal Reserve Bank. So how do they do it? It is called "quantitative easing" or simply QE.

Read the article and listen to the audio report below to learn more about QE. We will discuss our findings on the threads.

The Fed Warms up the Printing Press

Quantitative Easing, Explained

In this week's Discussion area, examine the following:

If the money supply continues to expand what does that eventually imply about inflation?

Reference no: EM131161900

Questions Cloud

Explain how mendel explanation of genetic transmission : Can you explain how Mendel's explanation of genetic transmission and how it fits with our memory system
Demand for particular category of labor : Consider a labor market where the demand for a particular category of labor is given by the equation LD = 20 – 2W. Suppose that the supply curve of workers in this market who are also native-born citizens is given by LN = 2W,
Determine the pulling force f : A block of mass M is lifted at constant velocity, via an arrangement of pulleys as shown. Determine the pulling force F. Ignore the mass of the pulleys.
Law of gravitation back : I'd like to explore how Newton was able to come up with his law of gravitation back in 1687. Back in Newton's day, people knew that bodies traveled in conic sections under the influence of gravity. People knew this formula can be used to describe ..
Engaged in expansionary monetary policy : Since the beginning of the Great Recession, the Federal Reserve Bank has engaged in expansionary monetary policy (buying U.S. Treasury bonds) with the goal of promoting economic recovery. If the money supply continues to expand what does that eventua..
How can the new focus on sexual assault on college campuses : How can the new focus on sexual assault on college campuses effect both men and women? Give an example of how some universities could be accused of violations of due process (from the article)
What is your recommended low cost : What is your recommended low-cost customer service employee daily assignment schedule?- What are your underlying assumptions and any qualitative factors that you believe are involved?
Keynesian model with efficiency wage and sticky prices : Keynesian model with efficiency wage and sticky prices
What is the speed of each proton : A beam of protons moves in a circle of radius 0.25m. The protons move perpendicular to a 0.23T magnetic field. What is the speed of each proton? 5.5x10^6 m/s is the answer

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd