1. Look at this data from the Federal Reserve, showing the changes it made to th
ID: 1208139 • Letter: 1
Question
1. Look at this data from the Federal Reserve, showing the changes it made to the federal funds target rate in 1998. What type of monetary policy was it following?
a. expansionary monetary policy
b. contractionary monetary policy
c. expansionary fiscal policy
d. contractionary fiscal policy
2. The Federal Reserve was most likely responding to:
a. a recessionary gap
b. an inflationary gap
3. How does quantitative easing differ from traditional open market operations?
I know that since the data shows a decrease, it will be a recessionary gap correct, but I don't know which policy is best used for question one and I am confused on question number three. Please help me. Thank you.
1. Look at this data from the Federal Reserve, showing the changes it made to the federal funds target rate in 1998. What type of monetary policy was it following? a. expansionary monetary policy b. contractionary monetary policy c. expansionary fiscal policy d. contractionary fiscal policy 1998 Date Increase Decrease Level (%) November 17 October 15.. September 29. 25 4.75 25 5.00 25 5.25 2. In question #2, above, the Federal Reserve was most likely responding to a. a recessionary gap b. an inflationary gap 3. How does quantitative easing differ from traditional open market operations?Explanation / Answer
(1) The correct answer is option (B). The monetary policy is contractionary monetary policy.
(2) The Federal Reserve was most likely responding to a recessionary gap. The correct answer is option (A).
(3)The quantitive easing differ from traditional open market operations as the former is influencing more yields in the business. The later shows exchange of bonds and reserves with long procedure.
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