Interest rates have been changing dramatically. Do you expect interest rates to continue to change? Which way do you think they will move – up or down? In general, comment on why the Federal Reserve changes interest rates (or adjusts the discount rate). What is the Federal Reserve trying to do if it “cuts interest rates” and what is it trying to do if it “raises interest rates”?
Interest rates have been changing dramatically. Do you expect interest rates to continue to change? Which way do you think they will move – up or down? In general, comment on why the Federal Reserve changes interest rates (or adjusts the discount rate). What is the Federal Reserve trying to do if it “cuts interest rates” and what is it trying to do if it “raises interest rates”?
Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter13: Money And The Banking System
Section: Chapter Questions
Problem 11CQ
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- Interest rates have been changing dramatically. Do you expect interest rates to continue to change?
- Which way do you think they will move – up or down? In general, comment on why the Federal Reserve changes interest rates (or adjusts the discount rate).
- What is the Federal Reserve trying to do if it “cuts interest rates” and what is it trying to do if it “raises interest rates”?
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Step 1: Explain how the Federal Reserve calibrates interest rate to combat inflation.
VIEWStep 2: 1. Explain predicted interest rate behaviour in the future.
VIEWStep 3: 2. Explain which way are the interest rates expected to move.
VIEWStep 4: 3. Explain the federal reserves modus operandi in 'cutting' and 'raising' interest rates.
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