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Has monetary policy exerted a stabilizing impact on the U.S. economy during the past decade? Why...

Has monetary policy exerted a stabilizing impact on the U.S. economy during the past decade? Why or why not?

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Answer #1

Monetary policy in past decade through quantitative easing in 2009 and the announcement of unlimited bond buying programmes by US Fed upto 2 trillion dollars has stabilised US economic growth in range of 2.5 to 3.5 percent while inflation has remained within 2 percent targets.

The reduction in interest rates, CRR and SLR and liquidity coverage ratio cuts has spurred liquidity and boosted consumption which caused aggregate demand to shoot and thus economic growth rose substantially to become number 1 economy across the globe.

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