Why did the FOMC cut the target federal funds rate so aggressively between September 2007 and December 2008 in a series of 10 cuts?
What will be an ideal response?
This was an example of the Fed acting preemptively. The economy was slow and the rate of inflation was low enough that the Fed probably had deflation fears in mind when they were aggressively cutting the rate. By cutting the rate aggressively the Fed had hopes that the economy would recover well before deflation would be a problem.
You might also like to view...
An economic model is a complex version of reality used to analyze real-world economic situations
Indicate whether the statement is true or false
If the government provides universal health? insurance, what screening process will the government? need?
A. It? won't need a screening test. B. It? won't use screening tests but it will use signals. C. It will only give health insurance to nonminussmokers. D. It? won't use screening tests but it will use statistical discrimination.
________ countries have explicit requirements about the number of parties that can participate in an election.
A. Most B. None C. All D. Few
Refer to the graph shown. A quantity restriction of QR will:
A. create excess demand represented by Q2 ? QR. B. reduce quantity supplied to Q2. C. reduce quantity supplied to QR. D. have no effect on quantity supplied.