Terms in this set (17)
Federal Open Market Committee
when was the federal reserve system created
to make important decisions that affect current and future economic conditions
why was the Federal Reserve created?
The make decisions regarding interest rates and the money supply
what does the FOMC do?
it effects current and future economic activity through AD
why is the FOMC important
if we should stop the stimulus plan, what was the Data, what are the expectations of the public
what will the FOMC talk about in the December FOMC meeting
forecasting can be wrong
what is the major challenge of the FOMC
purchased 10 year bonds to keep LR interest rates low (quantitative easing); bought more long term bonds but sold some to increase aggregate demand (operation twist)
stimulate the economy, but instead of banks lending out money they were sitting on it because they didn't want to loan out on a low interest rate. what did the fed do to fix this?
open market operation
puts downward pressure on interest rates from the great recession and gets the economy moving faster
sale; m1 supply falls because public writes a check
during inflation open market ______ of treasury bonds from/to the public? what does this do to m1?
long term rates are the average of st rates
why are LR low if SR are low?
Unemployment is about 6.5%
currently short term rates will continue to be low as long as what?
supply= lender, demand= borrower
in the loanable funds market, who is the lender and who is the borrower and w
housing market crashed, the severity of inflation; high interest rates
what was the great recession so great?
us is not back to full employment; that is around 5%, a lot of people left the labor force
is the us economy back to full employment
no the influence them
does the fed control interest rates?
because of the expectations of the consumers and businesses
why should the fed be clear about its policy objetives