Federal Reserve

Federal Reserve - Federal Reserve (Fed) What is the Fed...

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Federal Reserve (Fed) What is the Fed rate now? 0-0.25% very low. Who decides the interest rate policy? Federal Reserve board Federal open market comitee Why is the interest rate at its level today? What happened? Financial Crisis in 2008. Lead to economic recesssiojn. It is slow to stimulate the economy. What is inflation and how does it affect the Fed’s rate setting decision? Lowering the interest rates leads to inflation. Inflation leads to the devaluing of the dollar. It is the sustained increase in the general price of goods and services. What is QE1? Will there be QE2? QE 1: Quantity Easing is a unconventional monetary policy used by the fed to stimulate the economy. It entails the Fed creating money which it uses to buy government bonds/other assets. This increases the money supply and movement of money. QE 2: We are currently in the QE2, it has already been initated, in 2010. Firms Why should a firm borrow? Firms want to expand their businesses, and it is now a good time because interest rates on
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Federal Reserve - Federal Reserve (Fed) What is the Fed...

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