This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Explain the issues involved with the Fed acting as a lender of Last Resort (LLR). What will be an ... (Read 64 times)

mp14

  • Hero Member
  • *****
  • Posts: 534
on: Jun 30, 2018
Explain the issues involved with the Fed acting as a lender of Last Resort (LLR).
 
  What will be an ideal response?

Question 2

What do you think about dollarization?
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Bsand8

  • Sr. Member
  • ****
  • Posts: 327
Reply #1 on: Jun 30, 2018
Answer to Question 1

On the one hand, LLR enables the Fed to avoid panic and disturbance to proper functioning of financial markets. On the other hand, using the policy may cause problems of moral hazard.

Answer to Question 2

This is an open question. The answer is probably a bad idea unless in the very short run. Students should talk about the loss of seigniorage and the gain in credibility against devaluation, which should lead to lower domestic interest rates. Students should mention the importance of political will to repair the fundamental economic weaknesses of the country.


mp14

  • Member
  • Posts: 534
Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)

nyrave

  • Member
  • Posts: 344
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

Common abbreviations that cause medication errors include U (unit), mg (milligram), QD (every day), SC (subcutaneous), TIW (three times per week), D/C (discharge or discontinue), HS (at bedtime or "hours of sleep"), cc (cubic centimeters), and AU (each ear).

Did you know?

In 1886, William Bates reported on the discovery of a substance produced by the adrenal gland that turned out to be epinephrine (adrenaline). In 1904, this drug was first artificially synthesized by Friedrich Stolz.

Did you know?

Fungal nail infections account for up to 30% of all skin infections. They affect 5% of the general population—mostly people over the age of 70.

Did you know?

In 1885, the Lloyd Manufacturing Company of Albany, New York, promoted and sold "Cocaine Toothache Drops" at 15 cents per bottle! In 1914, the Harrison Narcotic Act brought the sale and distribution of this drug under federal control.

Did you know?

Malaria mortality rates are falling. Increased malaria prevention and control measures have greatly improved these rates. Since 2000, malaria mortality rates have fallen globally by 60% among all age groups, and by 65% among children under age 5.

Brain scans showing the white-matter pathways involved in everyday learning: Brain scans showing the white-matter pathways involved in everyday learning:
Many European Americans are involved in ethnic work, attempting to maintain an identity more precise ... Many European Americans are involved in ethnic work, attempting to maintain an identity more precise ...
Indirect-Acting Cholinergic Agnostic Agents Indirect-Acting Cholinergic Agnostic Agents
Development Issues Development Issues
Environmental Issues Environmental Issues
Please fully explain the answer with steps Please fully explain the answer with steps
Video: Transcription—A molecular view

For a complete list of videos, visit our video library