How did the Fed use the Federal funds rate to respond to the mortgage default crisis?
What will be an ideal response?
The 2007 mortgage debt crisis forced the Fed to implement an expansionary monetary policy that resulted in the lowering of the Federal funds rate target from 5.25 percent in September 2007 to 2 percent by April 2008. By December 2008, the Fed had cut the Federal funds rate to the target range of 0 to .25 percent where it has remained through 2010.
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A firm produces leather handbags and leather shoes. If there are economies of scope, the product transformation curve between handbags and shoes will be
A) a straight line. B) bowed outward (concave). C) bowed inward (convex). D) a rectangle.
The term Ceteris paribus means that:
a. the model includes all important variables occurring in the real world. b. all factors which influence the event are changing at the same time. c. one influence is changing and everything else is being held constant. d. the consumer is king.
"Assume that all individuals have perfect information about prices now and in the future, that they have identical tastes, that all markets are competitive, and that there is no government." This statement is indicative of how economists
a. apply the law of supply and demand. b. employ marginal analysis. c. are prevented from getting correct answers. d. abstract for analytic purposes. e. use realistic assumptions to develop theory.
Which of the following is not an advantage of the corporate structure over proprietorship and partnership forms of business organization?
a. Stockholders in the corporation have limited liability, whereas proprietors or partners have unlimited liability. b. Ownership rights of a corporation may be transferred more easily. c. Large investment funds are more easily attracted by the corporation. d. Corporations are less likely to suffer from the principal-agent problem.