Question

I need to know about specific monetary policies in place in the beginning of the 1990s. The instructor told us to remember that the Federal Reserve controls our monetary policy and they have a four main goals: 1. Price Stability 2. High Employment 3. Economic Growth 4. Financial Market Stability. So I need to know specific monetary policies used in that time period and what the goals were of those policies. (I need at least two policies). I already know that the main tools the Fed uses are the decreasing or increasing of the money supply (through open market operations, changing the required-reserve ratio, and changing the discount rate) and changes to interest rates. This is for a macroeconomics class if that helps.

Answer 1

The specific monetary policy used in that time period was for reducing the short term borrowing capacity of individuals in order to control inflation in the economy.

One of those specific policies included reducing the discount rate and the federal rate for accumulating the money and reducing the purchasing power of individuals. Moreover,this reduction had largely affected the fixed income securities group as there was downfall in the lending rates. And the target for controlling the inflationary practices was successfully achieved, though in the long run.