Eco 203 week 4 dq 1 federal reserve bank policy during the 2007-2008

Type: Instant Download

Format: Microsoft Word

Version: Current 2014-15

What is included in the full course package? The entire course study guide includes the homework solutions in word format for ECO 203 (bachelors program). Your tutorial will include these files:

  • ECO 203 Week 4 Quiz (Word document)
  • ECO 203 Week 4 Discussion questions 1, 2

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ECO 203 Week 4 Discussion Question Description:

Fed Policy during the 2007-2008 Recession. [Insert prompt].From 2007-2010, the Federal Reserve Bank (the Fed) used many practices that had never before been seen from the central bank of the United States.

Discuss the some of the actions that the Fed took during this period. Such as:

How the Federal Reserve’s lending practices changed during this period.

What did the Federal Reserve do to support firms deemed “too big to fail.”

Do you believe these actions were necessary to avoid a collapse in the financial system? Support your opinion with information from the textbook or external source(s).

Reference: Chapter 12, section 12.4: Bank Failures During the Great Recession, Chapter 14, section 14.4:Monetary Policy in the 2000s, and Conclusions section at the end of the Chapter 14

The Effect of Bank Lending on the Economy. In conducting expansionary monetary policy, even if the Federal Reserve Bank is providing reserves to the banking system, during a recession or during periods of slow economic growth, banks may choose not to lend out their reserves when interest rates are low and potential borrowers look risky. This is known as a “credit crunch”. Explain how a credit crunch affects economic growth. Specifically, answer these questions in your post:

How does a credit crunch affect consumer spending and business investment?

How does a credit crunch affect aggregate demand, GDP, and unemployment?

Reference: Chapter 14.1 Is Monetary Policy Effective? and section 14.3: Domestic Sectoral Effects.

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