ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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“There can be little doubt that exceptionally low interest rates on ten-year Treasury notes, and hence on home mortgages, have been a major factor in the recent surge of homebuilding and home turnover, and especially in the steep climb in home prices.”-Federal Reserve Chairman Alan Greenspan, June 9, 2005This quote illustrates the way that reductions in interest rates
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hinder economic growth.
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can promote economic activity.
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create money.
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crowd out private investment.
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Explanation:
Detailed explanation-1: -Which of the following actions did the Fed take in response to the mortgage debt crisis?-lowered the federal funds rates.
Detailed explanation-2: -Expansionary monetary policy works by expanding the money supply faster than usual or lowering short-term interest rates. It is enacted by central banks and comes about through open market operations, reserve requirements, and setting interest rates.
Detailed explanation-3: -The Fed has traditionally used three tools to conduct monetary policy: reserve requirements, the discount rate, and open market operations.
Detailed explanation-4: -The primary policy tool used by the Fed to meet its monetary policy goals is: open market operations.
There is 1 question to complete.