Visit the Federal Reserve website and answer the following questions
- What is the mission and legal mandate of the Federal Reserve System?
- What policy tools are available to the Fed to achieve its mission?
- What is the difference between an insolvent bank and an illiquid bank?Why/how does the Fed treat banks that are insolvent differently from illiquid banks?
The Fed has only increased the interest or discount rate twice since the 2007/08 recession. Will it push the rates up a bit more? We don’t know! We can find out what those at the Fed are thinking by checking out posted information each month by the FOMC (Federal Open Market Committee).
- According to the Fed, what are its inflation and full-employment targets?
- Explain how changes in the money supply will raise interest rates and how the anticipated increase in interest rates will likely affect GDP and employment.