and Interest Rates
and interest rates are important for individuals and businesses making decisions to finance purchases. The following articles deal with assessing conditions to finance purchases and important aspects of policy.
Allen, Bruce. "Leading Economic Indicators Predict Market Trends " Retrieved February 28, 2011 from:
Chan, Sewell (2010) "Fed Study Suggest..." The New York Times, Retrieved February 17, 2011.
Economic Focus: "What goes around", The Economist, Retrieved February 17, 2011.
Read the above articles and write a 4-5 pages that address each of the following questions:
1. Suppose the Federal Reserve wanted to reduce the money
supply. What are some of the tools the Fed would use to achieve this policy objective. (Be sure to use the background materials in your answer).
2. The government predicts that economic growth will be slower than expected. What can the Federal Reserve do to increase economic growth? What should it do if it wanted to reduce inflation in terms of the money
3. What major economic indicators would you examine if you were planning to purchase a new car, some business equipment or a house and needed a loan? Explain. How does the Chan article affect decisions by the firm and household?
Case Assignment Expectations:
Use concepts from the modular background readings as well as any good quality resources you can find from the cyberlibrary or other internet search engines. Pleas be sure to cite all sources within the text and provide a reference list at the end of the paper.
Length: 3 pages double spaced and typed.
The following items will be assessed in particular:
Your ability to understand the relationship between the supply of money
and the Federal Reserve.
Some in-text references to the modular background material (APA formatting not required).
The essay should address each element of the assignment. Remember to support your answers with solid references including the case readings.
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1. Chan, S. (2010). Fed Study Suggests Rates Will Stay at Record Lows Until 2012. The New York Times. Retrieved July 21, 2011 from http://www.nytimes.com/2010/06/15/business/economy/15fed.html?dbk.
2. Allen, B. (2008). Leading Economic Indicators Predict Market Trends. Investopedia. Retrieved July 22, 2011 from http://www.investopedia.com/articles/economics/08/leading-economic-indicators.asp#axzz1SkZQyKMH.