Naked Economics: Undressing the Dismal Science Book by Charles Wheelan   Please refer to the chapter titled, "The Federal Reserve," in the Naked Economics book to answer this question. Which of the below statements DOES NOT CORRECTLY describe the immense power or policy choice of the Federal Reserve (the Fed), as explained in this chapter? 1) The Federal Reserve controls the money supply and therefore the credit tap for the economy.   2) The Fed can use monetary policy to counteract economic downturns, or prevent them from happening.   3) The Fed can inject money into the financial system after sudden shocks, such as the 1987 stock market crash or the terrorist attacks on Sept. 11, 2001.   4) When the Fed opens the credit tap and increases the money supply, interest rates rise and people buy less and borrow less.

"Animal spirits"—optimism about and predictions for the current and future state of markets—can fuel increased spending on things like homes and financial instruments, even when those "spirits" are not based on concrete information. If the Federal Reserve or other government entities feel that increased spending on real estate isn't merited by actual economic conditions and is leading to an asset price bubble, in your opinion, should they intervene? It depends on how certain the government is that a price bubble exists or will exist. No. The government should not tell people how to spend their money. It depends. If the information is exclusive to the government, it should share it. But if the information is publicly available, the government should stay hands-off. Yes. The government has an obligation to step in whenever it can assist with things like price bubbles.

Consider the following hypothetical scenario: actual GDP is measured to be 3% below potential.  Measured unemployment, by most accounts, is thought to be 2% above the natural rate of unemployment.  If inflation is relatively low: In this scenario, what would the Federal Reserve most likely do at the next few Federal Open Market Committee (FOMC) meetings? Assuming the Fed follows the policy course you set forth in part (1), what should the Fed be concerned with in the years that follow?

In response to the recession of 2008, the US Federal Reserve Bank made several efforts to increase banks excess reserves, decrease interest rates for lending, and increase lending.  These "extraordinary measures" have been somewhat controversial (at least among American politicians). What are some of the effects of these efforts and/or some of their potential future impacts?

Suppose all banks have zero excess reserves. The Fed buys bonds for $1 million and a bond dealer deposits the check in his or her bank. The required reserve ratio is 8 percent. The bank loans out the maximum it is allowed to a local business. The business writes a check for the full amount for supplies, which is then deposited in another bank. The largest loan the second bank can make is: The largest loan the second bank can make is $. (Round your answer to the nearest dollar.)

Over the last 10 years the Federal Reserve has substantially changed the way it operates. What is different about how the Federal Reserve now conducts policy?   options:   it discusses its policy in public and asks for guidance from Congress   it gives the public forward guidance on what it will do   It is more secretive about interest rate and other policy changes   it places fewer regulations on commercial banks

The former chairman of the Federal​ Reserve, Alan​ Greenspan, used the term​ "irrational exuberance" in 1996 to describe the high levels of optimism among stock market investors at the time. Stock market indexes such as the​ S&P Composite Price Index were at an​ all-time high. Some commentators believed that the Fed should intervene to slow the expansion of the economy.   Why would central banks want to clamp down when the economy is​ growing?

At the time of the writing of the chapter titled, "The Federal Reserve," in the Naked Economics book (2019 edition) the Chair of the Federal Reserve was: Group of answer choices   Ben Bernanke   Jerome Powell   Paul Krugman   Alan Greenspan

The United States Federal Reserve has two mandates when setting monetary policy - keep annual inflation low (around 2-3%) and the unemployment rate low (around 5%).  Typically, efforts to adjust the money supply to cause inflation to decrease causes unemployment to increase and vice versa. Now, imagine a situation where the United States faces high inflation and high unemployment (called stagflation, was issue in late 1970s).  What do you think the Federal Reserve should do in this situation?

Could you add more information regarding the below statement? "I do agree with the notion that the Federal Reserve is the most important financial institution in the world. The reason being that it plays such a pivotal role in the economy - for better or for worse. For example, the federal reserve supervises banking institutions and provides many financial services to the U.S government. In addition, the federal reserve has the power to regulate the economy when it is unstable. For example, the Federal Reserve has the ability to manipulate interest rates in order to stabilize the economy when it is needed most. Overall, without the Fed, the economy would have a much more difficult time maintaining itself. When it comes to inflation specifically, I do believe that the Federal Reserve should step in as it is their responsibility. I think that increasing interest rates could be a significant help, but I think that decreasing the money supply/circulation as well as selling bonds could help…