Essays on Monetary Policy

U.S. House of RepresentativesWashington, D.C. 20515

Dear Representative Johnson:

I am a young constituent of Texas interested in observing the political developments in the country. As a representative of Texas serving the nation for more than two decades, I would like to bring to your kind notice a key problem of public interest to initiate necessary actions for effecting a policy change in the near future. My strong concern is about the current monetary policies of this great nation. As a youngster who is observing the economic development of this country with interest, I would like to express my views on some ...

The Wonderful Wizard of Oz, Frank Baum (1900)

Overview of the book

Frank Baum’s “The Wonderful Wizard of Oz” seems to be solely intended to entertain children but it has more meaning that what the author presents to the world. The book follows the adventure of a young girl, Dorothy, who has to embark on an adventure where she encounters and interacts with other characters, some of whom have supernatural powers. Dorothy, the protagonist, lives with her uncle and aunt because her parents passed away. They live in Kansas where she brought her Toto. Toto is Dorothy’s companion, and he accompanies ...

The role of a central bank during a bubble phase has been widely debated in the past. While some argue that monetary policy tools should not be used to prick a bubble in the economy, others argue that using monetary policy tools to prick asset bubbles early in their development can benefit the economy in the long term before it becomes too big and poses systemic risk to even the real sectors. A central bank can use monetary policy to burst a developing bubble in the economy by increasing the policy interest rate. This would cause the yields of ...

Abstract

The major purpose of the study is to capture institutional policies used by Federal Reserve to counter periods of challenges such as the great recession. In which case, the study presents a platform for learning the financial markets of an economy and also the various strategies that the existing institutions within the economy can employ to solve any arising challenges within the economy. In order to achieve the above objective, strategy used to develop this research involves a proper analysis of the state of the financial economy of the United States of America before and during the times of ...

Introduction

Australia is among the most flourishing and high open economies in the world. The country’s robust economy is facilitated by its economic and trade links with the developing economies as well as transparent and open investment and trade environment. It has a robust industrial sector and large service sector. The other important sectors in this country include the education sector, agribusiness sector, and tourism sector. The present paper delves into the state of the Australian economy. Particularly, the paper discusses the measurement of the Australia’s macroeconomic performance, its economic performance from 2012 to 2015, the major factors ...

Articulate why an export business would prefer a rising or declining exchange rate for their domestic currency.

Exchange rate shows the price of one currency in terms of another one. Modern economies are open to international trading and business, thus the value of the national currency is regularly monitored and interpreted in terms of the foreign currencies. Mostly, a direct exchange rate is used, which defines the price of a unit of the foreign currency in terms of the national one. However, sometimes. An indirect quote is used to express the price of a unit of the domestic currency in terms of the foreign one. Most economies now use floating exchange rates that determine currency rates ...

The Federal Funds Rate Hike

The New York Times, in an article by Binyamin Appelbaum entitled "Fed raises key interest rate for first time in almost a decade" discussed the pronouncement of the Federal Open Market Committee ﴾FOMC﴿ to increase the Federal Funds rate. The decision came exactly seven years after the financial crisis in 2008 when the FOMC reduced its rates to near‐ zero level to prevent the economy from collapsing. The article described the move as signaling the beginning of the end of the Fed 's stimulus program and highlighted the Fed statement that the Fed intends to increase the rates gradually ...

Since the Great Depression, economists have been arguing about Keynesian and Monetarist Theories. They argue which theory was best suited based on its infrastructure for the situation. It causes them to argue today on which theory would be best for the nation’s economy. While the two theories overlap slightly, they are vastly different, with one focusing on the economic stimulation the central bank can provide, and the other focusing on the central bank’s monetary supply. While both have faced criticism, and both have been used to manipulate the country’s economy, it seems Keynesian Theory is best ...

Introduction

Through several stages of the development the world faces new challenges. One of them has the form of financial crisis. The cut down taking place in 2008 was not the first crisis that slow down the global economy and welfare of the state, while it was not the last one. This paper considers the situation at the financial sector during the spread of financial crisis in 2008, its main reasons and forthcoming consequences. Simultaneously, the author analyzes in this paper the impact of the crisis over the welfare of such states as the United States of America, the United ...

Following the American Psychological Association’s Guidelines

Mark Ostendorp and Linda Lombard Abstract This study examines the concept of multiculturalism, which became very frequently used nowadays. Multicultural communities are present in almost all highly populated countries, and can be divided into religious, racial, linguistic and ethnic groups. These groups have been forming throughout the human history, and thus are very important when a certain country is being studied. Specifically, this paper is going to look into the ways in which multiculturalism affects and changes the societies where it is present. It is known that the United States is a multicultural community, and when its social life ...

Introduction

The Great Depression of 2008 was one of the most impactful among all the recessions that took place in the world till date. The subprime recession of 2008 can only be compared with the Great Depression of the 1930s in terms of negative GDP (gross domestic product) growth, job loss, deterioration in wage rate, and decrease in total economic value for private and public organizations. The impact of the 2008 recession was felt all across the globe even though the recession started in the USA. The United Kingdom that largely followed the same expansionary fiscal policies like the USA ...

FIVE YEAR STRATEGIC MARKETING PLAN

Introduction of the Marketing Plan The purpose of the five year strategic marketing is a comprehensive plan developed to evaluate the proposed strategic and marketing alternatives for the M-Connect Shipping. The strategic plan aimed at investigating the surrounding areas of alliances within an industry sector to strengthen the market presence of the M-Connect Shipping within its market and increase its horizontal integration. The Strategic Marketing Plan is a key component of M-Connect Shipping overall Business Plan and serves as a roadmap for improved work plans every year wherein it features the certain strategies intended to research the alliance of ...

March unemployment down in most of Valley

Unemployment refers to the situation that exists when people who are actively seeking work are without work. The unemployment is measured using the unemployment rate, which is a measure of how prevalent unemployment is. This rate is calculated through the division of the number of people who are unemployed with the current number in the labor force. The unemployment rate is normally denoted as a percentage. The unemployment rate is normally measured after regular intervals such as monthly, quarterly, and semi-annually. In this article, the focus is on the fall in unemployment rates in the San Joaquin valley counties ...

The video presented in the module tries to analyze various aspects of economics. The video is based on three grounds: the U.S economy, impoverished countries, and Opportunity International's role in ensuring that poverty levels in developing countries are reduced. The narration admits that although the U.S. economy is excellent, that is not the case with other countries. That is the main reason why Opportunity International has taken the initiative to provide microloans to individuals to start businesses. As a time of the narration, Opportunity International had managed to provide its services in 28 countries. Opportunity International believes that the ...

Most of the central banks in many countries have almost similar structure. However, the Federal Reserve System in the USA has a totally different structure. Federal Reserve System was created in 1913. The reasons as to why it has 12 Regional Federal Reserve Banks can be traced to the American political history .

Before the Federal Reserve System, there was fear in America, in the political arena, of centralized power. The Americans had a great resistance towards setting up of a central bank. They also had a high doubt on the moneyed interests upon which central banks were formed. This distrust had led ...

What is fiat money? Why is fiat money important in the United States today?

Fiat money is a kind of money that has no intrinsic value. It has value of exchange but no value in use. It is used as money because the government decreed it as valid money and the public willingly accept it in exchange of goods. Normally, fiat money bears “legal tender” feature and includes modern paper currency, coins and checkable deposits.

This kind of currency is very important in today’s modern economies like the United States primarily because it is widely used as ...

The game simulation requires the specific knowledge of macroeconomic concepts. It shows how the decisions made by Chairman of Federal Reserve System affect the general well-being of the economy. The game clearly displays the process of monetary policy and how inflation and unemployment are interconnected between each other, i.e. policies that aim at curbing unemployment may result in high inflation. Given that there is always a trade-off between inflation and unemployment. The task of Chairman is to keep both inflation and unemployment at normal rate, which is complicated by the fact that all economic conditions and events occur at the ...

DD Curve is the summarized relationship between Exchange Rate and Ouput Level which shows all the combinations of output and the exchange rate for which the output market is in short run equilibrium i.e (aggregate demand= aggregate output)

The above figure represents upward sloping DD Curve explaining the effect of movement in exchange rate on output level when both Domestic Price Levels(P) and Foreign Price Levels(P*) are fixed. The figure represents the effect of depreciation of domestic currency on domestic output levels and related aggregate demand. Thus, when domestic currency depreciates ...

Slide 1:

The monetary policy actions by the Bank of England determines the amount the bank will charge as interest when it lends to other banks. This interest rate is vital in determining the rates at which banks will lend to their customers such as businesses and institutions.

If the bank of England charges higher rates of interest to banks, this obviously increases the costs of these loans and in retrospect, the banks must raise their lending rates to customers. Higher lending rates means few customers will be willing to borrow from banks and may switch to other lending institutions ...

Introduction

Every country in Europe has had intense debates over whether or not to adopt the Euro as a common currency. Adopting the Euro as a common currency in Europe has distinct advantages and disadvantages for member countries.

Advantages

With the US Dollar showing signs of weakness, nations across the globe would consider the option of switching to the Euro as the currency for international currency transactions (Kotabe and Halsen 73). The advent of globalization has made conventional currency frameworks such as adjustable pegs redundant. Increased cross-border capital inflows have made it increasingly difficult for countries to adjust their monetary policies. ...

Monetary policy of a country is maintained by a regulatory committee which regulates money supply and interest rates. Money plays an important role in the economic activities of a country. Recession causes unemployment as was seen during the 2008 when unemployment percentage rose to 10 percent. The Federal open market committee adopted policies like buying mortgage backed securities and reducing interest rates for a long period .The cost and benefits of very low interest rates have been analyzed to understand the changes in the economic activities. By reducing interest rates economic activity is stimulated by more spending on capital goods and increased household ...

Question 1. Explain why the aggregate demand curve slopes downward?

Answer: The summary of the IS-LM model is depicted by AD curve. AD curve slopes downward because at a lower level of price, the real money balance increases, and interest rate falls, which stimulates the investments. As a result the equilibrium income increases.

Question 2. What is the impact of an increase in taxes on the interest rate, income, consumption, and investment?

Answer: When the tax increases, it will cause the IS curve to shift towards left reaching to IS2 from IS1. As a result of this, the equilibrium point A shifts to B where the interest rate will reach to r2 by falling from r1. The income will also be reduced from Y1 to Y2. The increase in the tax ...

Arab Republic of Egypt (ARE) is located in the north-east Africa and partially in Asia (Sinai). It shares borders with Israel, Palestine (Gaza Strip) to the east, Sudan to the south and Libya to the west. In the north Egypt borders the Mediterranean Sea and the Red Sea in the east. The Suez Canal (length 173 km) spread through the territory of Egypt is the shortest sea route from the Mediterranean to the Red Sea and to the Indian Ocean. Therefore the Suez Canal is an essential strategic object towards Egyptian economic prosperity. Egyptian territory is actually inhabited only ...

Current macroeconomic situation in the U.S

Macroeconomic factors define those economic factors that affect the economy at a larger scale. As per previous research analysis it’s been established that the U.S economy faces an economic downturn every four to six years (US Economic Outlook). As per the article ‘US Economic Outlook for 2014’, the current bull market is presently driving in its fourth year. Despite the fact that the markets are flourishing in this economic year, an average American is not. The major economic cavity of unemployment that poses a huge dilemma to every American still remains persistently high along with the household debt. Moreover the ...

- Introduction

IBM is a world leader company in information technology and stands as the largest revenue generating Company in its field. In the past 50 years, IBM has earned a place for itself as the pioneer in information technology developments and innovation. The Company manufactures products ranging from hardware to software for its impressive clientele around the world. These products are designed for another range of storage products, line of business servers, customized microchips including the application software. In addition to manufacturing, IBM also serves as a consulting and outsourcing agent. The new information age is quite challenging to compete ...

THE UNITED STATES FEDERAL RESERVE SYSTEM

The Federal Reserve is the central bank of the United States of America (Federal Reserve System, 2013). It is governed by a board of directors appointed by the president, whose main responsibility is the determination of the monetary policy through the manipulation of the various monetary tools (Federal Reserve Board, 2013). The bank was originally formed in December 23rd 1913 by an act of congress and is currently headquartered in Washington D.C, with twelve other branches located in major cities across the country (Federal Reserve System, 2013).

One of the monetary tools that are used in setting the monetary ...

Role of Federal Reserve

In the past few years, the Federal Reserve has come under increased scrutiny due to the financial crisis of 2007 – 2009. It has been criticized for lowering the interest rates, which resulted in cheaper mortgages, and thereby precipitating into a full blown financial crisis. Further, it has also been criticized for transforming itself into an investment vehicle, due to its role in quantitative easing, even though it helped in financial recovery. Historically, it has been Federal Reserve’s dual mandate to maintain the stability of prices and employment. That it does by varying its federal funds target, by ...

3.1 Assess the factors contributing to the establishment of general and specific rates of interest.

Interest rates are the prices that individuals or institutions pay for the use of various financial assets. General interest rates apply to a cross section of individuals and have the most influence on the economy of a country. The government through the central bank aims at monitoring and influencing the direction of general interest rates. Specific interest rates on the other hands are narrowed down to apply to a specific financial instrument or a small group of financial instruments . These specific interest rates do not affect the macroeconomic ...

Introduction

This is a strategy adopted by the government through the Central Bank to control macroeconomic shocks due to fluctuation in wages and prices of goods and services. Stabilization may include monitoring the business cycle and interest rate regulation by the central banks. Moderation of these factors leads to changes in unemployment rate, recovery of an economy from economic shock control borrowing and money supply. In general terms stabilization are used to regulate the fluctuation of business cycle. There are two main elements of stabilization policies, that is, monetary and fiscal policies.

Elements of Stabilization Policies

Monetary policy This is the process through which ...

The United Kingdom of Great Britain and Northern Ireland has been a state with one of the largest economies in the world for hundreds of years. The Bank of England, which is the central bank of the United Kingdom, gained its independence to set the country’s monetary policy in 1997. The key responsibility of the Bank of England is the monetary stability of the financial system. All decisions are taken by the independent Monetary Policy

Committee (MPC), which sets the interest rates to meet the inflation targets. The MPC is accountable to the House of Commons Treasury Committee, which ...

Introduction

The AS-AD framework is a very useful economy tool, which reduces the economy into a simple model of supply and demand. The aggregate demand curve (AD) is given by the summation of consumption (C), investments (I), government purchases (G) and net exports (X-M). On the other hand, the supply curve is a function of the expected price levels. This paper uses the AS-AD model to analyse the economy at various levels of employment, and the adjustments that accompany movement various policy actions. It begins with a depiction of an economy operating at less than full employment, showing that economies often tend towards the ...

Austerity Measure

The growth path of an economy does not follow a smooth trajectory. It is composed of a number of short-term and long-term fluctuations. The magnitude and duration of such fluctuations are varied. The government uses its two important tools, the fiscal policy and the monetary policy to smoothen out this jagged path to some extent. During periods of boom, that is, when the economy experiences high rate of growth with low unemployment rate and high income, the government follows a contractionary fiscal and monetary policy. In times of slump when the economy is under a phase of deceleration in growth with low output ...

Question

Assume that the country is in a period of high unemployment, interest rates are at almost zero, inflation is about 2% per year, and GDP growth is less than 2% per year. Suggest how fiscal and monetary policy can move those numbers to an acceptable level keeping inflation the same. What is the first action you would take as the president? As the chairman of the Fed? Why? What would be your subsequent steps?

Answer

Analyzing the given data indicates us that this economy is suffering from the deflation. In another word, we see high unemployment, very low inflation and very ...

In case, real GDP is lower than potential GPD expansionary policies are implemented in correcting contraction of business cycle. Expansionary Fiscal policy leads to increases in purchases by government, tax rate decrease and transfer payment increase to overcome contracting business cycle. Expansionary fiscal policy closes gap of recession, stimulates economy and decreases rate of unemployment.

Fiscal policy tools to stimulate economy are:

Government Purchases Expenditures done by government sector for services and final goods come under Government purchases. Government purchases are part of GDP bought by the government. Government purchases include heavy cost expenses like highway construction and aircraft clips carriers to smaller expenses like ...

1.0 Introduction `According to Barbone et al. (2009) all members States of the European Union are also members of the Economic and monetary Union (EMU). Barbone et al. (2009) further states that the member states coordinate their policy-making in support for the economic objectives of the European Union (EU). Nonetheless, there are some member states that have gone further to adopting a single currency (Euro) (Barbone et al., 2009). They are the member states that comprise of the Euro area. Euro, according to Bekaert (2010) is a single currency that has been adopted by 19 European states that make up ...

In this section, I will provide a comparison of the inflation rate and economic growth of Belgium and the Eurozone. The inflation rate is defined as the percentage change in the price index from the preceding period. It captures the rate of change of prices calculated on a monthly or annual basis. The data on the inflation rate for Belgium and the Eurozone are presented below which I obtained from the news release of Eurostat (2013).

Meanwhile, economic growth is defined as the increase in the capacity of the economy to produce goods and services, compared from one period to another. ...

- When a country such as the United States is experiencing serve and prolonged recessionary trend discount rate, term auction, and open market facility can provide useful means of ensuring that the economy returns in the right course. Discount rate is the interest rate that the central bank charges commercial banks and other depository institutions when they receive money from the Federal Reserve Bank's lending facility. During periods of prolonged recessionary trend, the Federal Reserve System should reduce the discount rate in order to encourage commercial banks and other financial institutions to lower the interest rate they charge to ...

Question 1

The Ford Motor Company, a global American multinational automotive and an automaker leader based in Dearborn, Michigan produce and distribute automobiles across six continents. The company’s establishment dates back to the year 1903 by Henry Ford. It is the fifth largest motor company in the world. The company has about 163,000 employees and approximately 70 plants globally. The main automotive brands for the company include Ford and Lincoln. In addition, the company provides financial services via Ford Motor Credit Company (Ford Motor Company, 2012).

The company is fascinating to study as it has expanded becoming one of the ...

Jedi monetary policy is an article that was written by Jonathan Wright in Washington. The article was written on 8th September 2011. The article is criticizes the actions that the Swiss national bank has taken to stimulate the economic growth of the country.

According to the article, the Swiss government aimed at stimulating the economic growth by the applicatication of macroeconomic policies. The Swiss government aimed at increasing the economic growth rate to at least 6 percent. The writer of the article points out several policies that the Swiss national bank could use to stimulate the economy. He shows ...

Introduction

The monetary policy of Colombia has undergone numerous changes from 1994 to 2014. The primary purpose for doing so is to target inflation and stabilize the financial status of the country. For this object, state agencies and other monitoring authorities had occasionally evaluated the response of such policy in relation to various financial variables. Although there is not any specific and explicit target regarding real or nominal exchange rates and the monetary policy has to rely upon mainly on the variation of short-term exchange rates. Therefore, in an open economy like Colombia, exchange rates are considered as the most ...

The great depression was the deepest and lengthiest economic recession in the history of the industrialized nations of America and Europe that lasted from 1929 to 1939. The crash of the stock market that led to Wall Street wiping out many investors due to panic marked the beginning of the great depression in United States of America. Germany, however, had been plagued by structural unemployment during the 1920s. There were very sharp contractions of the German economy in 1929. The US economy rose again after 1933 but suffered yet another recession in 1937-38 while the German and many other ...

International Finance Trilemma

After 2007-2012 global economy recessions, many nations are striving to sustain their economy stability in the efforts of meeting the respective governments and citizens’ fundamental needs. Primarily, Trilemma of international finance hold that a country or nation cannot concurrently peg the exchange rate, maintain the independent monetary policy and permit free financial flows cross-borders (Feenstra & Taylor, 2008). International finance Trilemma states that under no given scenario that a country will enjoy steady foreign exchange rates, capital mobility and monetary policy that is independent. Based on international finance Trilemma, the central bank is often tasked to ensure that the economy is stable ...

Recommending prolific changes in the monetary policy

This assignment is being submitted on July 13, 2015 The Chair U.S. Federal Reserves Washington D.C.

Dear Madam,

The international monetary fund has lowered the global economic growth rate by 0.2 points to 3.3% and causal for the same is chain link between stable and crisis struck economies. The prevailing economic scenario across the world is extensively affected by the vagaries of crisis struck nations, Greece and China (Zeng, 2015). Although both countries are resorting to possible stabilization, the resultant impact of their economic upheavals is imminent over US economy. As monetary policy adopted by the Federal Reserve ...

December 12, 2010

Inflation in Macroeconomics

The most effective indicator of country’s economic health is its financial state. Financial system not only provides interconnections in economics, but also conducts macroeconomic regulation, and serves as a tool for governments to regulate economic development. For this reason, the activity of executive power in every country is directed towards stability of financial and credit system and overall financial state. In order to ensure the stability, inflation processes must be controlled. It is necessary because inflation results in harmful socio-economic outcomes: inflation leads to deformation of macroeconomic regulation instruments. Inflation is a process of price level ...

NAMEINSTITUTION

Introduction Monetary policy is a vital tool for the Government to mend economic problems in a country. Economic theory can be applied into monetary policy to know which move policy makers can do to meet their desired economic measures. For example, in economic theory, reducing the money supply will lower aggregate demand, because people will have lesser purchasing power. This will also lead to other economic fluctuations because of the decrease in aggregate demand. A very good example is the money contraction France did in 1724. By collecting ideas from Francois Velde (2009) on his analysis on the events that ...

Chapter 10

Question#1: Use Keynesian cross to explain why fiscal policy has a multiplied effect on national income. Answer: The equation for calculation of national income under Keynesian model is Y=C+I+G+(X-M). In this formula, the Y denotes national income, C denotes level of consumption, I denote level of investment done in the economy, G denotes government’s expenditure, X denotes imports, and M denotes imports of an economy. With the help of this formula, the governments drive fiscal policies for the economy. With the help of this equation, it has been said by Keynes himself that when the ...

Abstract 2

Mixed economy system and the allocation of resources 2 Whitbread and Burberry in the mixed market system 3 Fiscal and monetary policy 4 Fiscal and monetary policy impact on Whitbread and Burberry 4 A competitive environment 5 Benefits of fiscal and monetary policies for local brands in the UK 6 Conclusion 6

Works Cited 7

Abstract The research will look at how government intervenes in a mixed market system so that there is proper allocation of resources among people. The intervention from government is required so that the resources are utilized efficiently rather than only on ...

Chapter 7

Define recession and expansion. What are the beginning and ending points of a recession called? In postwar Canada, which have been longer on average, recessions or expansions? Recession: Recession is the phase in the economy during which the economic activity declines. During this period, production, employment, income and all other economic activities falls below the normal level. A country generally experience negative economic growth during recession. Expansion- After recession, the economy slowly starts to recover and the expansion happens. Expansion is the economic period during which the country’s GDP starts to increase because of increased productivity, employment, real ...

INTRODUCTION

In this information age, the digital revolution has transformed the industry to an information based economy. Since the late 1970s, the day to day evolution of technology has shaped the modern society by introducing globalized communication. The UK mobile phone network industry is developing day by day by introducing the new-tech systems in the market. O2, Vodafone, EE, T-Mobile, and Orange are the biggest mobile phone network providers in the UK (Rushton, 2012). This report has presented a thorough economic analysis of mobile phone network industry in the UK, considering the biggest network providers in the country.

ANALYSIS OF MOBILE PHONE OPERATORS IN UK

Mobile Phone Network ...

The United States is facing gradual economic growth with large downside risks. The causes of the economic downturn in the US are attributed to the 2007 financial crisis when the nation experienced a housing bubble burst. Another root of downturn of the economy in the US is the sovereign debt crisis. This is so because the countries such as Greece are asking for assistance to finance their debt, which is affecting the US economy and the world economy. The fear is that this would take the United States economy to a low GDP level. Since the US is the leading economy, ...

Executive Summary

Banks such as UK bank get the money that they lend from the deposits. The level of lending is usually dependent on the demand of the funds by the public and on the economic level of the state. When the demand for money is high, UK bank will have to check on the level of money that is circulation before it decides on how much to lend out (Sessa, 2011). It is done to reduce chances of having excess money supply into the economy that may result to the inflation. The bank can use various ways to ensure that ...

China is one of the strongest economic powers in the world. Its political leadership focuses on the fundamental alteration of the country’s growth strategies; this occurs through a rebalancing of economic growth sources (Lardy, 2007). Through strategies such as the expansion of domestic consumption, it notes significant economic growth. For instance, the country has managed to sustain its growing population economically. It occurs through rapid job creation, income distribution improvement, lowered rates of income inequality and a reduction of the outsized energy consumption. Aspects of China’s economy that depict its growth and challenges include; national output, employment rates, inflation, ...

Business report

Financial repression can be seen in many countries. The concept of financial repression was introduced in 1973 by Stanford economists Edward S. Shaw and Ronald I. McKinnon. The term financial repression means a government policy which aims at lowering interest rates and restricting capital movements. The goal of such government policy, which concerns monetary policy, is to reduce the government debt. Such government measurements can be defined as “stealth tax” (Polin 3). The long-term goal of such measurements is to reduce unemployment in the country and to spur the economic growth. It can be said, that such measurements can be ...

Following the American Psychological Association’s Guidelines

INTRODUCTION The economy management of the country has two kinds of policies to intervene and regulate the markets in case of market failure: Fiscal policies and Monetary policies. Fiscal policies are the responsibility of the government, and the monetary policies are implemented by the Federal Reserve System (FED). The economic policies can be implemented in two ways: expansionary and contractionary economic policies. Expansionary policies stimulate the economy and expenditures of consumption and investment increases as the result of these policies. Contractionary policies slowdown the economy, and the expenditure level decreases. In this essay, the definitions of the fiscal ...

There is a need for any country to have its central Bank. Unlike most countries, which use the central Bank system, the U.S has a federal Banking system which is also known as the fed. The headquarters of the federal Bank is in the capital Washington D.C and also has other twelve district banks in different locations. Federal Reserve Act established the fed in 1913 and was formed to solve problems of money in the country (Gali, 2009). The decisions made by the federal Bank directly affect the safety and soundness of the country’s financial system. The federal Bank ...

Every nation has independence to choose, which exchange rate system it will follow. The choice for selecting a suitable exchange rate ranges from a flexible exchange rate or fixed exchange rate system. Under floating exchange rate system, the value of the currency is decided by market forces, while, under fixed exchange rate systems, the currency of the country is pegged against some standard of value. The choice of exchange rate is a tough task and depends significantly on the freedom of capital to flow in and out of the country. However, one negative effect of allowing the free capital flows is that ...

Question 1

The federal reserve bank is a major institution in the American’s economy and society designed to offer financial stability by maintaining currency flexibility. The Fed as consistently played a significant role in the Untied States economy and monetary policy since its establishment. The Fed established in 1913, therefore, its the roles and regulations go back only to the early years of the 20th century. For instance, the Fed came into play when a harsh economic crisis started in 2008. During this period the GDP shrank, unemployment increased and millions of Americans were worried about their futures. It was the role of ...

Economics is a broad field which has its active recognition in almost every walk of life. Economics is the name of how to earn the money and how to consume it and it is one of the most effective things. There are two different types of economics, which particularly are microeconomics and macroeconomics. There are a number of concepts which specifically come under the ambit of Economics and among them; the name of Taylor Rule is one of them, which specifically associated with the leverage and debt . The main perspective of this assignment is to analyze leverage of financial firms from a ...

The Professor’s Name

The economy of the United States is one of the largest national economies in the world, with its GDP(purchasing power parity) of 16.24 trillion dollars in 2012 (World Factbook, 2014). The country’s economy is growing continuously as it has its GDP growth rate is2.8% as of 2012 (World Factbook, 2014). As the data oninterest rates, inflation, and unemployment rate is available for the year 2013 at the latest, I will be analyzing the economic situation in the US for the period of 2009-2013. Even though the country’s macroeconomic condition decreased after experiencing the Global Financial Crisis, ...

In deliberating about economic issues, economist agrees on particular goals, which include economic growth, decrease in the unemployment rate and low inflation. In order to attain these goals, the federal reserve can take action via fiscal or monetary policies. Fiscal policy concerns taxes and spending while monetary policy involves the supply of money and the level of interest rates. Therefore, when either of these policies is not implemented properly, it can result in an economic downturn as reflected on the last year of the Bush Administration. The last year of the Bush Administration experienced an economic downturn because ...