Question

Which of the following was NOT one of the main tools the Fed used in the Great Recession to avoid problems caused by the zero lower bound? O A. exchange rate easing OB, quantitative easing OC. forward guidance When the Fed alters the types of assets it owns, it is using A. exchange rate easing B. forward guidance C. quantitative easing When the Fed increases its quantity of assets, by effectively printing money and buying securities in the open market, it is using O A. credit easing O B. quantitative easing ° C. exchange rate easing O D. forward guidance When the Fed signals to the market how long it thinks interest rates will remain low, it is using O A. credit easing ⓔB. forward guidance OC. quantitative easing lick to select your answer

Answer 1

1. Exchange rate easing was one of the main tool that the Fed not used in the great recession to avoid problems caused by the zero lower bound.

2. When the fed alters the type of assets it own, it is using credit easing. Because it is the strategy that the central bank use to ease credit conditions in the economy by buying private assets. Flow of credit and lending increases.

3. When the fed increases its quantity of assets , by effectively printing money and buying securities in the open market, it is using quantitative easing. Because it refers to the introduction of money into the money supply or buying securities by central bank, this increases the money supply and lowers the interest rate.

4. When the Fed signals to the market how long it thinks interest rates will remain low, it is using forward guidance. Because forward guidance is the term used to communicate about the future monetary policy. Aim to calm uncertainties in markets and corporations.