Monetary policy is crucial to the economy and impacts all types of economic and financial decisions individuals make. For example, depending on the state of the economy, individuals may decide whether to obtain a loan to purchase a new car or house or to start their own company, whether to expand a business by investing in a new plant or equipment, and whether to put savings in a bank, in bonds, or in the stock market. Since the United States is the largest economy in the world, its monetary policy also has significant economic and financial effects on foreign countries.
This paper analyzes and examines various issues related to monetary policy. First, the state of the United States economy is discussed. Next, the issue of whether the Federal Reserve is more concerned about high inflation or the possibility of a recession or other issues is analyzed. Lastly, this paper outlines the stated direction of recent monetary policy and examines the policy actions the Federal Reserve has taken to confirm that direction.
THE STATE OF THE ECONOMY
Presently, the state of the economy in the United States and foreign countries is one of slowing growth and increased uncertainty. Since mid-2000, the economy has been plagued by a continuing decline in the stock market, the rise in bankruptcy filings, credit card debt, foreclosures, and unemployment. In addition, the United States government and the governments of other countries have not been immune from the economic slowdown, as evidenced by the fact that the United States has returned to having a deficit.
Numerous high-profile events have impacted the state of the economy in the United States, with the effects trickling down into other countries. First, the Dow Jones Industrial Average and Nasdaq began declining in mid-2000 and both indices are now down over 50% from their highs. The decline in the stock markets led to hundreds of thousands of individuals who worked for technology companies being...
" (ECB, 2007) Operational efficiency is held to be the most important of all the principles of operation for the ECB and can be defined as "the capacity of the operational framework to enable monetary policy decision to feed through as precisely and as fast as possible to short-term money market rates. These in turn, through the monetary policy transmission mechanism, affect the price level." (ECB, 2007) Equal treatment and harmonization
Monetary Policy Discuss some of the major determinants of the demand for money by sector and in total. Discuss some differences in the demand for money which might exist for countries other than the U.S. An effective formulation of the Monetary Policy depends on the determining factors of the demand for money. Money Demand acts as a channel on transmission mechanism for monetary policy. Therefore the consistency of the money demand function
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Fed's Bullard: Current Fed Policy Much Easier Now Than in 2012, which was published by The Wall Street Journal on February 14th, 2013, financial reporter Michael S. Derby methodically examines the claims of Federal Reserve officials, who have stated that changes to their monetary policy have proven to be productive over the last year. The purpose of the article is to provide readers with access to the latest public
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