Question

Identify each of the items as being primarily associated with open market operations, quantitative easing, or forward guidance. Reduces concern that the Fed may suddenly change policies Deliberate lack of details of planned bond purchases Bond purchases intended to depreciate the dollar Answer Bank Quantitative easing Open market operations Bond sales intended to raise interest rates Forward guidance

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Answer #1
QUANTITATIVE EASING
Quantitative easing involves the Federal reserve buying government securities from
the market in order to lower interest rates and increase the money supply.
Quantitative easing or easy money policy results in a decrease of foreign demand for dollars.
The dollar depreciates and the net exports increase.
OPEN MARKET OPERATIONS
Open market operations refer to the buying and selling of government securities in
the open market in order to expand or contract the money in the financial system.
FORWARD GUIDANCE
The federal reserve indicates what monetary policy they will implement going forward that
is known as forward guidance.
Based on the definitions the following items can be classified as follows.
ITEM
Reduces concerns that the Fed may suddenly change policies. FORWARD GUIDANCE.
Deliberate lack of details of planned bond purchases. NONE OF THE ABOVE.
Bond purchases intended to depreciate the dollar. QUANTITATIVE EASING
Bond sales intended to raise interest rates. OPEN MARKET OPERATIONS.
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