Select any two (2) of the following questions. As you develop your essay, remember to include not only text materials but also contemporary materials as well. These can come from various sources and can reflect domestic and/or global concerns.
1. Why was the Federal Reserve System set up with 12 regional banks rather than one central bank as in other countries? Why was it made an independent quasi-governmental body and not a direct part of the federal government?
2. Review the following assigned website: http://www.newyorkfed.org/education/fed21_2012.html. Select two of the featured video/slide sections, and detail what you have learned, and how it relates to your text readings.
3. What would happen to the value of the deposit multiplier if the public wanted to hold part of any increase in demand deposits in the form of currency, and/or if the public transferred part of any increase in demand deposits into time and savings accounts? What are the implications for the Fed's control over the money supply?
4. You often read in the newspapers that the Fed has just lowered the discount rate. Does this signal that the Fed is moving toward a more expansionary monetary policy? Why or why not?
5. Most open market operations are currently repurchase agreements. Define these agreements and show what they tell us about the likely volume of defensive open market operations relative to dynamic open market operations.
6. Classify each of the following as either an operating target or an intermediate target, and explain why.
- federal funds rate
- three month T bill rate
- the monetary base
7. In response to the Sub-Prime Mortgage and Financial Crisis, Ben Bernanke worked to expand the Federal Reserve's Balance Sheet through a process called Credit Easing / also called Quantitative Easing What is Credit/Quantitative Easing, and how does it effectively create electronic money? How did the Fed invest/spend this money? Has this policy been successful?
8. Briefly explain the history and then the differences between QE1, QE2 & QE3.
It is expected that you will incorporate current/contemporary materials from the *WALL STREET JOURNAL into your discussion. Of course materials found in any of the major economic/business/financial publications such as * BARRON'S. FORBES, NEW YORK TIMES, BUSINESS WEEK, ECONOMIST can be used to supplement the Journal articles in developing your essay.