Is only a proposal

Is only a proposal

Final Paper
Monetary Theory and Policy Fall 2019
Proposed Topic due November 15 at class or via Dropbox in Sakai
Completed Paper Due December 16 noon via Dropbox in Sakai

The goal of this assignment is to develop a policy memo identifying an issue, coming up with a recommended course of action, and providing a persuasive argument for the recommendation, an exploration of any risks and challenges in that course of action, and a description of at least one alternative to the recommended policy action. The paper should be short—roughly five pages and no more than 7 pages. The paper can be organized in any manner, but should clearly answer each of the six questions below. The audience for the memo is a member of the central bank’s monetary policy committee.
The topic of the paper is your choice. It could be a topic that we are covering in class, a topic that is high on the agenda of monetary policy authorities such as the Federal Reserve, or a monetary policy-related issue that you are interested in. It’s important that you can draw a connection to monetary policy. In addressing the issue, there are no right answers. What matters is the quality of your arguments and marshaling of facts and theory in support of the arguments.

Solution Preview

Liquidity of Financial Institutions
Monetary policy is concerned with the issue of liquidity of financial institutions. According to the Federal Reserve, all banks must adhere to reserve requirements. The supply of money reduces when the requirements of reserve are raised causing financial institutions to decrease loans and credit availability.

(345 words)