Macroeconomics (7th Edition)
7th Edition
ISBN: 9780134738314
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 15.3.14PA
To determine
The role of the Fed Chair.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
What would Fed Chair Volker do if he was the chair of the Federal Reserve right now?
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…
The following excerpt is taken from the Ministry of Finance: Statement on the economic
effects and financial response to the COVID 19 Pandemic in Trinidad and Tobago.
"The Central Bank of Trinidad and Tobago is helping the economy navigate through these
difficult circumstances. For example, the Central Bank has reduced the reserve requirements
for the commercial banks from 17.0 percent to 14.0 percent; and the repo rate from 5.0 percent
to 3.5 percent."
"As a result, Commercial banks have reduced their prime lending rates from an average of 9.5
percent to 7.5 percent; the narrowing spread between lending rates and deposit rates will surely
bring about improved efficiency within the banking system."
"It should be noted that whereas the reduction in the prime lending rate has an automatic
beneficial effect on loans that have a variable interest rate, the commercial banks have advised
that loan agreements with fixed interest rates require one-on-one consultation with the
commercial banks,…
Chapter 15 Solutions
Macroeconomics (7th Edition)
Ch. 15 - Prob. 15.1.1RQCh. 15 - Prob. 15.1.2RQCh. 15 - Prob. 15.1.3RQCh. 15 - Prob. 15.1.4PACh. 15 - Prob. 15.1.5PACh. 15 - Prob. 15.1.6PACh. 15 - Prob. 15.1.7PACh. 15 - Prob. 15.2.1RQCh. 15 - Prob. 15.2.2RQCh. 15 - Prob. 15.2.3RQ
Ch. 15 - Prob. 15.2.4RQCh. 15 - Prob. 15.2.5RQCh. 15 - Prob. 15.2.6PACh. 15 - Prob. 15.2.7PACh. 15 - Prob. 15.2.8PACh. 15 - Prob. 15.2.9PACh. 15 - Prob. 15.2.10PACh. 15 - Prob. 15.3.1RQCh. 15 - Prob. 15.3.2RQCh. 15 - Prob. 15.3.3RQCh. 15 - Prob. 15.3.4PACh. 15 - Prob. 15.3.5PACh. 15 - Prob. 15.3.6PACh. 15 - Prob. 15.3.7PACh. 15 - Prob. 15.3.11PACh. 15 - Prob. 15.3.12PACh. 15 - Prob. 15.3.13PACh. 15 - Prob. 15.3.14PACh. 15 - Prob. 15.3.15PACh. 15 - Prob. 15.4.1RQCh. 15 - Prob. 15.4.2RQCh. 15 - Prob. 15.4.3PACh. 15 - Prob. 15.4.4PACh. 15 - Prob. 15.4.5PACh. 15 - Prob. 15.4.6PACh. 15 - Prob. 15.5.1RQCh. 15 - Prob. 15.5.2RQCh. 15 - Prob. 15.5.3RQCh. 15 - Prob. 15.5.4PACh. 15 - Prob. 15.5.5PACh. 15 - Prob. 15.5.6PACh. 15 - Prob. 15.5.7PACh. 15 - Prob. 15.5.8PACh. 15 - Prob. 15.5.9PACh. 15 - Prob. 15.6.1RQCh. 15 - Prob. 15.6.2RQCh. 15 - Prob. 15.6.3PACh. 15 - Prob. 15.6.4PACh. 15 - Prob. 15.6.5PACh. 15 - Prob. 15.6.6PACh. 15 - Prob. 15.6.7PACh. 15 - Prob. 15.6.8PACh. 15 - Prob. 15.6.9PACh. 15 - Prob. 15.2RDECh. 15 - Prob. 15.3RDE
Knowledge Booster
Similar questions
- "Why do economists nearly uniformly support an independent Fed rather than one beholden directly to either the president or Congress?arrow_forwardBriefly describe the main policy tools that Fed use in conducting its monetary policy?arrow_forwardArticle Summary In a September 2013 speech to the Independent Bankers Association of Texas, Federal Reserve Bank of Dallas president Richard Fisher stated that the Fed's credibility was harmed when it announced the previous week that it would continue its large bond purchasing program. In June, Fed Chairman Ben Bernanke had stated that that the program could begin to be cut back later in the year, and several other Fed officials expressed being open to the announced timing of this policy. Bernanke's change in his announced timeline of the Fed's intentions regarding the bond purchasing program brought criticism that the Fed had misled investors. In his speech, Fisher stated "I disagreed with the decision of the committee and argued against it. Doing nothing at this meeting would increase uncertainty about the future conduct of policy and call the credibility of our communications into question. I believe that is exactly what has occurred, though I take no…arrow_forward
- What are the Fed’s three objectives in conductingmonetary policy?arrow_forwardFed Cuts Key Interest Rate Again Washington, DC—Alarmed by the rapidly weakening economy, the Federal Reserve cut a key interest rate again yesterday. The Fed cut the discount rate, dropping it from 2.75 percent at the beginning of the year to a mere 0.25 percent now. The discount rate is the rate the Fed charges for loans it makes to private banks. By dropping the rate, the Fed is hoping banks will borrow more money, then use that money to make new loans to businesses and consumers. What has spooked the Fed is that GDP is falling at the fastest rate in 50 years. The Fed is hoping that record low interest rates will prompt more spending, preventing a protracted recession. If every one-point change in the federal funds rate alters aggregate demand by $180 billion, how far would AD shift in response to the interest rate cuts?arrow_forwardSome people argue that the most powerful person in the world is the Chair of the Federal Reserve. What are some of the valid arguments for this viewpoint? What “power” does this person hold and why is it potentially so important? Who is the current Chair of the Federal Reserve? text: Schiller, B. R., & Gebhardt, K. (2016). The economy today (14th ed.). Columbus, OH: McGraw-Hill Higher Education.arrow_forward
- The graph shows the demand curve for reserves in the market for bank reserves. 8.00- Federal funds rate (percent per year) The federal funds target rate is 4 percent. Draw the supply of reserves curve determined by the Fed to achieve the federal funds target rate. Label it. 7.00- Draw a point at the equilibrium in the market for bank reserves. 6.00- 5.00- 4.00- 3.00- 2.00- 0 25 50 75 RD 100 Reserves on deposit at the Fed (billions of dollars) >>> Draw only the objects specified in the question. ☑arrow_forwardRead the scenario below and answer teh question that follows. The Federal Reserve Board announced an emergency rate cut on Sunday, March 15, lowering interest rates to near zero. This rate cut comes less than two weeks after the Fed cut interest rates by half a point and marks continued effort to minimize the economic impact of the coronavirus (COVID-19). Source: https://www.cnbc.com/select/impact-of-fed-rate-cut-amid-coronavirus-concerns/ A decrease in the rate of interest: A. Lowers the opportunity cost of money and leads to an increase in the quantity of money demanded. O B. Raises the opportunity cost of money and leads to a decrease in the quantity of money demanded. O C. Raises the opportunity cost of money and leads to an increase in the quantity of money demanded. O D. Lowers the opportunity cost of money and leads to a decrease in the quantity of money demanded.arrow_forward(Problem 3, Page 439) Suppose that the Fed has a policy of increasing the money supply when it observes that the economy is in recession. However, suppose that about six months are needed for an increase in the money supply to affect aggregate demand, which is about the same amount of time needed for firms to review and reset their prices. What effects will the Fed's policy have on output and price stability? Does your answer change if (a) the Fed has some ability to forecast recessions or (b) price adjustment takes longer than six months?arrow_forward
- Summarize the Before Collapse of Silicon Valley Bank, the Fed Spotted Big Problems article from the New York Times. Descriptive (no more than one-half page in length). Provide a summary of the article you analyze. (What is the major idea or theme the author is describing, developing, or attempting to put forth? In what ways does the author expand on his/her major idea or theme? What conclusions does the author reach?) What I'm looking for here is a "bird's-eye view." NO QUOTES; NO DATA or STATISTICS.arrow_forward1. If one still argues that the monetary policies conducted by the Federal Reserve is heavily influenced by the Congress and the White House, what could be the evidence we can find in the system which supports the argument? (briefly explain in a paragraph or so)arrow_forwardBriefly describe how the Fed would use its three main policy tools to stimulate the economy. (1) The Fed should increase or decrease the benchmark rates such as Fed funds rate? Briefly explain Why. (2) The Fed should buy or sell Treasury securities? Briefly explain Why. (3) The Fed should increase or decrease the bank reserve requirement ratio? Briefly explain Why.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning