Discuss the method of quantitative easing used by the Federal Reserve during the recession of 2008, including any criticisms of this action
The method of quantitative easing used by the Federal Reserve involved making discount rate loans broadly available to many financial firms like those that buy and sell financial securities or even insurance companies, not just to banks.
The quantitative easing policies adopted by the Federal Reserve (and by other central banks around the world) are usually thought of as temporary emergency measures. But, if these steps are indeed to be temporary, then the Federal Reserve will need to stop making these additional loans and sell off the financial securities it has accumulated—and the process of quantitative easing may prove more difficult to reverse than it is to enact.
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The total market value of final goods and services produced in an economy during a one-year period is
A) personal income. B) profit. C) net national product. D) Gross Domestic Product.
The U.S. business cycle record, in common with most, has
A) peaks lasting longer than troughs. B) troughs lasting longer than peaks. C) recessions lasting longer than expansions. D) expansions lasting longer than recessions.
As discussed in the Case in Point on the size of the fiscal multiplier, a study conducted by John Taylor on the effect of fiscal policy since the year 2000 suggests that
A) the multiplier effect of fiscal policy is much less than that for monetary policy. B) temporary fiscal policy financed through government borrowing implies a multiplier value between 0.8 and 1.5. C) fiscal policy has little effect on the economy and that the multiplier value is effectively zero. D) statistical models are inadequate to determine the multiplier and the multiplier value likely varies based on the state of the economy.
In what type of analysis will an increase in the tax rate always lead to an increase in tax revenues?
A) ad valorem taxation B) excise taxation C) dynamic tax analysis D) static tax analysis