Question

Having gotten a good idea of what the Federal Reserve System is and what it does, now it’s your turn to do some research.

Your Task

1.Using the Internet, research one of the powers, policies, or people involved in the Federal Reserve System. Some suggestions: quantitative easing, selection of the new Fed chair, Fed policies in response to financial crisis.

2.Locate an article from a credible source regarding recent Federal Reserve activities. (Source must not be more than twelve months old.)

3.Summarize the article, and make sure to include the link to it.

4.In addition, answer the following questions:

Does your article support the idea that the chair of the Federal Reserve is one of the most powerful positions in the U.S. (and possibly the world)?

If so, in what way(s)?

If not, in what way(s)?

Two to Three pages.

Answer 1

ans 1=‘Quantitative easing’ is an unconventional monetary strategy in which a federal bank buys governmental securities / other securities from the market to augment the money supply & foster lending & investment. When short run interest rates are at / nearing 0, normal open market operations, that target interest rates, are no longer effectual, so instead a federal bank can target specified quantities of assets to purchase. Quantitative easing raises the supply of money by buying assets with newly created bank reserves to provide financial institutions more liquidity.

If federal banks increase the supply of money, it may lead to inflation. In a worst-case situation, the federal bank may cause inflation thru QE without any economic growth, causing a period called ‘stagflation’.