ECONOMICS (CBSE/UGC NET)

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ECONOMICS

MONETARY POLICY

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
“ ____ The Fed has identified achievement of ‘substantial’ improvement in the labor market outlook as its main criterion for ending asset purchases. Beyond that, the FOMC has set a 6.5% unemployment threshold for starting to raise the federal funds rate.”
A
Fiscal Policy
B
Monetary Policy
C
Either A or B
D
None of the above
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: -Raising rates can lead major businesses, particularly those that hold high amounts of corporate debt, to lay off workers or slow hiring. As a result, the unemployment rate increases, further slowing the circulation of money as consumer demand drops.

Detailed explanation-3: -Answer and Explanation: The correct answer is b: reducing income inequality. The Federal Reserve is described as the central bank of the United States. As the country’s monetary authority, the Federal Reserve has certain objectives, which is known as a dual mandate.

Detailed explanation-4: -To implement a contractionary policy, the Fed sells these Treasurys to its member banks. The bank must pay the Fed for the Treasurys, reducing the credit on its books. As a result, banks have less money available to lend. With less money to lend, they charge a higher interest rate.

There is 1 question to complete.
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