Discussion board 3 money and banking!

Discussion board 3 money and banking!

Monetary Policy: Quantitative Easing and Conventional Policy

Here is another question that is very relevant to this class. How does monetary policy work under normal circumstances? After the 2007-2008 subprime crisis, the Federal Reserve implemented Quantitative Easing or Large Scale Asset Purchases. How does the Fed go about doing unconventional policy in non-normal times?

PS: this is the final discussion question.

You will need about 500 words (approximately) to answer this question. You must provide references.

Solution Preview

The Federal Reserve Act instructs that the Federal Reserve carry out monetary policy to efficiently support the aims of employment, steady prices, as well as the moderate lasting interest rates. Although, the act gives three separate objectives of monetary policy; the Fed’s directive for monetary policy is normally referred to as the dual mandate (Mayer, 1993). Here is how the monetary policy works under normal circumstances;

(590 words)