This topic contains a solution. Click here to go to the answer

Author Question: How did the Federal Reserve begin to take a more active role in financial market (Read 49 times)

brandy.spencer

  • Guest
How did the Federal Reserve begin to take a more active role in financial markets in 2008?  How have these actions impacted the Fed's balance sheet?  In your opinion, did this more active role have a positive impact on the US economy?
« Last Edit: Dec 4, 2019 by Celeste »



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Celeste

  • Hero Member
  • Posts: 583
Reply #1 on: Dec 4, 2019
  • Undo Best Answer
  • The federal reserve system tries to protect against inflation, unemployment, and the possibilities of rescission by introducing interest rate cuts, assisting ailing financial institutions, printing new money to be used (quantitative easing), and forward guidance about interest rates.

    Take, for example, the fight against unemployment. By cutting tax rates, the Fed boosts the economy by reducing the interest rate that banks pay each other for overnight loans, the federal funds rate. The idea is that cuts to the federal funds rate lead to lower interest rates throughout the economy. Those low rates spur businesses to make new investments, spur people to buy houses or invest in renovations, and spur purchases of major durable goods like cars. When the economy is depressed and has lots of excess capacity — unemployed workers, vacant offices and storefronts, idle factories — all that extra spending leads to an increase in employment and economic output.

    While the recession was bad, the tactics instilled by the Fed prevents a repeat of the Great Depression; essentially, they successfully avoided that cataclysmic scenario.

    Hope this helps!




    kishoreddi

    • Member
    • Posts: 246
    Reply 2 on: Dec 4, 2019
    Excellent


    peter

    • Member
    • Posts: 260
    Reply 3 on: Yesterday
    Wow, this really help

     

    Did you know?

    Patients who cannot swallow may receive nutrition via a parenteral route—usually, a catheter is inserted through the chest into a large vein going into the heart.

    Did you know?

    The most common treatment options for addiction include psychotherapy, support groups, and individual counseling.

    Did you know?

    Chronic marijuana use can damage the white blood cells and reduce the immune system's ability to respond to disease by as much as 40%. Without a strong immune system, the body is vulnerable to all kinds of degenerative and infectious diseases.

    Did you know?

    The first documented use of surgical anesthesia in the United States was in Connecticut in 1844.

    Did you know?

    A seasonal flu vaccine is the best way to reduce the chances you will get seasonal influenza and spread it to others.

    For a complete list of videos, visit our video library