« previous next »

Author Question: What limited the effectiveness of monetary policy during the Financial Crisis of 2007-2009? What ... (Read 560 times)

viki

  • Hero Member
  • *****
  • Posts: 525
on: Jun 30, 2018
What limited the effectiveness of monetary policy during the Financial Crisis of 2007-2009?
 
  What will be an ideal response?

Question 2

If any country decides to exit from the Eurozone, it will gain ________.
 
  A) free capital mobility
  B) a fixed exchange rate
  C) reduced transactions costs
  D) monetary policy independence


kingfahad97

  • Sr. Member
  • ****
  • Posts: 308
Reply #1 on: Jun 30, 2018
Answer to Question 1

During the financial crisis, the default risk premium soared as investors feared that firms would have difficulty repaying their loans or making the coupon and principal payments on their bonds. By the end of 2008, the Fed had caused the federal funds rate to fall nearly to zero, but the rise in the risk premium counteracted the effects of the Fed's expansionary policy. The Fed attempted to bring down long-term interest rates by taking the unusual step of directly buying both 10-year Treasury notes and mortgage-backed securities, but the Fed was not able to entirely offset the effects of the increase in the risk premium.

Answer to Question 2

D


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question

viki

  • Hero Member
  • *****
  • Posts: 525
Reply #2 on: Jun 30, 2018
Thank you


kingfahad97

  • Sr. Member
  • ****
  • Posts: 308
Reply #3 on: Jun 30, 2018
No problemo


« previous next »
 

Did you know?

The liver is the only organ that has the ability to regenerate itself after certain types of damage. As much as 25% of the liver can be removed, and it will still regenerate back to its original shape and size. However, the liver cannot regenerate after severe damage caused by alcohol.

Did you know?

Coca-Cola originally used coca leaves and caffeine from the African kola nut. It was advertised as a therapeutic agent and "pickerupper." Eventually, its formulation was changed, and the coca leaves were removed because of the effects of regulation on cocaine-related products.

Did you know?

According to the CDC, approximately 31.7% of the U.S. population has high low-density lipoprotein (LDL) or "bad cholesterol" levels.

Did you know?

Signs of depression include feeling sad most of the time for 2 weeks or longer; loss of interest in things normally enjoyed; lack of energy; sleep and appetite disturbances; weight changes; feelings of hopelessness, helplessness, or worthlessness; an inability to make decisions; and thoughts of death and suicide.

Did you know?

Disorders that may affect pharmacodynamics include genetic mutations, malnutrition, thyrotoxicosis, myasthenia gravis, Parkinson's disease, and certain forms of insulin-resistant diabetes mellitus.

The grey side-gilled sea slug Pleurobranchaea maculata. The discovery of tetrodotoxin in this slug i The grey side-gilled sea slug Pleurobranchaea maculata. The discovery of tetrodotoxin in this slug i
(a) Varicella zoster virus recurring as shingles, a painful rash limited to an area enervated by 1 ... (a) Varicella zoster virus recurring as shingles, a painful rash limited to an area enervated by 1 ...
Minerals are nonrenewable resources in limited supply Minerals are nonrenewable resources in limited supply
The Energy Crisis The Energy Crisis
The Lorenz Curve for the United States, 2009 The Lorenz Curve for the United States, 2009
The fiscal policy to counter an inflationary gap is a(n) The fiscal policy to counter an inflationary gap is a(n)
Video: B cells and antibodies

For a complete list of videos, visit our video library