It is a well-known concept that changes in monetary policy have a substantial effect on economic growth. The Federal Reserve Bank holds the power to enact these types of policies and in 2008 they chose to implement quantitative easing. According to the Investopedia financial dictionary, quantitative easing is a policy that targets the lowering of current interest rates. Securities are purchased by the Federal Reserve Bank which in turn allows more money to circulate through the banking system (Investopedia online financial dictionary, n.d.). Positive effects seemed to stem from this initial implementation leading the Federal Reserve Bank to put this policy back into action in the fourth quarter of 2010. This decision was made after the country came face to face with the beginnings of another economic downfall. Purchasing securities to lower interest rates may sound like a suitable answer to the rising economic crisis but a look back at statistical evidence will show that there is a lack of positive sustainable results from quantitative easing.
An article in the Economist reveals that the Federal Reserve Bank’s main goal in implementing quantitative easing is to target investment by increasing the amount of money available to banks for lending (The Economist, 2014, para. 3). This increase in lending may seem great on the surface but if it pushes too much money into the system it can actually negatively affect inflation. Examining the values presented in the US Inflation Calculator shows that after quantitative easing was implemented in the fourth quarter of 2010 the inflation rate steadily increased. In January of 2011 inflation was listed at 1.6 increasing over the next nine months up to 3.9 (US Inflation Calculator, n.d...
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References
Quantitative Easing. (n.d.). Investopedia. Retrieved January 20, 2014, from http://www.investopedia.com/terms/q/quantitative-easing.asp
Smith, L. (2010, November 5). Quantitative Easing: What's In A Name?. Investopedia. Retrieved January 22, 2014, from http://www.investopedia.com/articles/economics/10/quantitative-easing.asp
U.S. Economic Confidence Index (Weekly). (n.d.). Gallup economy. Retrieved January 22, 2014, from http://www.gallup.com/poll/125735/economic-confidence-index.aspx
US Inflation Calculator. (n.d.). Current US inflation rates: 2003-2014. Retrieved January 22, 2014, from http://www.usinflationcalculator.com/inflation/current-inflation-rates/
What is Quantitative Easing?. (2014, January 14). The economist. Retrieved January 21, 2014, from http://www.economist.com/blogs/economist-explains/2014/01/economist-explains-7
The Island of Mocha in the video is an example of a traditional economic system evolving into a market system. Every person plays a key role in this traditional system. They had fisherman, coconut collector, melon seller, lumberman, barber, doctor, preacher, brownies seller, and a chief. The Mochans got sick of trading goods all across the island just to get the things that they want or needed. The Chief decided that they would use clam shell for currency instead of trading.
Since the onset of the Federal Reserve we have not gone into a major depression, and over a course of time there will be times when our economy will peak and boom and the Fed will feel that it is time to slow the economy by raising the rates.
Reserve Bank of Australia (2010). Measures of consumer price inflation. Retrieved August 19, 2010, from http://www.rba.gov.au/inflation/measures-cpi.html.
With many unemployed and the market reaching The Great Recession as many economist call it, the Federal Reserve started to step in to try and save the economy and some of the economic crises that were occurring. The Federal Reserve began to buy many financial assets from banks who were in trouble by these lenders and suppliers who had loans the...
ThisNation. (2013, December 27). What is "soft money"? . In ThisNation.com. Retrieved December 27, 2013, from http://www.thisnation.com/question/004.html.
"U.S. National Debt Clock : Real Time." U.S. National Debt Clock : Real Time. N.p., n.d. Web. 4 May 2014.
Wildlife tourism has become a particularly popular trend over the years. Riding on elephants, taking pictures with lions, swimming with dolphins are only a few of the adventurous and thrilling activities that wildlife tourism provides. Even my own school is planning a trip to South Africa to participate in several of the enthralling ventures.
The Federal Reserve Board uses three monetary tools that affect macroeconomics such as unemployment, inflation, and interest rates, and control the money supply; these tools are known as discount rate, reserve requirements, and open market operations. In The Economy Today Schiller 2010 states that “Monetary Policy is the use of money and credit controls to influence macroeconomic outcomes” (p.309.) It also refers to the actions assumed by the Federal Reserve Board.
Corporate Attorney Salary (United States)." Corporate Attorney (US) Salary. N.p., n.d. Web. 29 May 2014.
In the study of macroeconomics there are several sub factors that affect the economy either favorably or adversely. One dynamic of macroeconomics is monetary policy. Monetary policy consists of deliberate changes in the money supply to influence interest rates and thus the level of spending in the economy. “The goal of a monetary policy is to achieve and maintain price level stability, full employment and economic growth.” (McConnell & Brue, 2004).
United States Federal Reserve. (February 11, 2014). Monetary Policy Report. Retrieved June 18, 2014, from http://www.federalreserve.gov/monetarypolicy/mpr_20140211_summary.htm
"Pros and Cons of IVF - IVF & Regulation." Pros and Cons of IVF - IVF & Regulation. N.p., n.d. Web. 20 Feb. 2014.
This policy aimed to reduce interest rates and stimulate investment
...Mercedes-Benz Prices with MSRP & Invoice. (n.d.). In True Car. Retrieved December 3, 2013, from http://www.truecar.com/prices-new/mercedes-benz/
Currency Fluctuation, What is Currency Fluctuation, 2014. Available at: http://www.wisegeek.org/what-are-currency-fluctuations.htm Retrieved at 6th April 2014