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7. The Fed has been trying to help the economy out of recession since 2008. What policies has the Fed pursued? Have these policies ben successful?The Federal Reserve has made multiple improvements to help the economy come back from the recession since 2008. These improvements include lending for banks, buying mortgages, and also unemployment that some have been successful but are starting to decline at a slow rate. The Federal Reserve made attempts lending for banks after the 2008 recession started to occur. The Fed provided line of credits to financial and lending institutions. The cash given provided funds for loans and also consumer buying. The Federal Reserve also tried to drop long termed interest rates which was initiated 2010; also the Fed bought bonds which was valued around 260 billion dollars. The Federal Reserve also provided cash to foreign central banks so there can be loans made; the reason behind this is to protect the United States markets that are relied on or part of the foreign country. The Federal Reserve also has tried to buy mortgages, which was to stabilize the economy. Basically buying the mortgages let the Fed have more money to pay off mortgage debt, government bonds, and also reduce long term interest. The Federal Reserve also has announced if the long-term interest rates will not decrease they will take action; also considering if the unemployment rate is below 8.2%. The polices in which the
Ryan BalchWritten Assignment: Module 611/14/14Federal Reserve implemented worked for a few years but statistics show that after 2012 more of the same issues are showing up and most commonly known as operation twist. The Federal Reserve has been partially successful with their policiesbut has not worked completely. 8. Interest rates today are at historic lows, yet the economy is still struggling. What other factors might be at work causing businesses and households not to borrow and spendEven though the interest rates today are at a historic low the economy is still struggling with borrowing money from businesses and households. The first reason I believe there is less borrowing is because of consumers who still have bad credit. These consumers can’t loan out money because of bad credit situations which may be the reason why less people are borrowing, because there is statistics claiming that many people want to borrow from banks but can’t unless they have a strong credit score. Initially this will cause less borrowing to banks and less profit made by lending out the money to other people or other banks. But for the prime, subprime, and deep subprime borrowers there has been no increase for mortgage debt. The second cause for households to not spend or borrow could be possibly of welfare. I think welfare can cause individuals to spend more overall. Welfare percentages are increasing constantly and will eventually cause under spending. The government spent over billions of dollars to fund the welfare program without any clear results and is actually making people spend less. More people on welfare the less spending