Central Banks & Federal Reserve System

Central Banks & Federal Reserve System

Subject: Economics    / General Economics
Question
Essay Question for Chapter is name Central banks & Federal Reserve system & i will upload also Financial Crisis & i will upload also Money Market

This Central Banks & Federal Reserve System

1) Former Congressman Jack Kemp reportedly once said that he wanted to become the most powerful man in Washington, D.C.?the chairman of the Board of Governors of the Federal Reserve System. What does Representative Kemp’s comment imply about the power of the chairman of the Federal Reserve? Do you think he may have been exaggerating? Explain.

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2) Former Board of Governors chairman Paul Volcker reportedly once said that the Federal Reserve is free to pursue any policy it desires, as long as it convinces Congress that such a policy is reasonable. What does Volcker’s comment suggest about the independence of the Fed? Explain.

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3) What are the factors that promote the independence of the Federal Reserve?

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4) What factors limit the independence of the Federal Reserve?

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5) What are the arguments for and against an independent Fed?

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6) What is the theory of bureaucratic behavior? What types of behavior does it predict the Fed might undertake?

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7) In recent years, has Fed policymaking become more or less transparent? Why?

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8) Describe the structure and responsibility for policy tools in The Federal Reserve System.

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9) Discuss similarities and differences between Ben Bernanke and Alan Greenspan in their respective roles as chairman of the Federal Reserve Board.

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Chapter Financial Crisis

1) Describe the sequence of events in a financial crisis in an advanced economy and explain why they can cause economic activity to decline.

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2) Describe the sequence of events in a financial crisis in an emerging market economy and explain why they can cause economic activity to decline.

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3) Contrast the stages of a financial crisis between an advanced economy and an emerging market economy.

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4) What is the problem with government safety nets, such as deposit insurance, during the formative stages of a financial crisis?

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5) Discuss the difference in Stage Two of a financial crisis between an advanced economy and an emerging market economy.

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6) Discuss why some view the Fed as a culprit in the U.S. housing bubble during the 2000s.

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7) In an emerging market economy, a lending boom and crash are not inevitable outcomes of financial liberalization and globalization. Discuss when a boom and crash will occur, and how it can be avoided.

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8) In the second stage of a financial crisis in an emerging economy, a speculative currency attack begins. Why can’t the government defend itself from such an attack?

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9) What does the “twin crises” in an emerging economy financial crisis refer to?

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10) Discuss some of the financial innovations in mortgage markets that led to the U.S. financial crisis in 2007.

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11) Why was the shadow banking system important during the 2007-2009 U.S. financial crisis?

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Chapter Money Market

1) Explain why banks, which would seem to have a comparative advantage in gathering information, have not eliminated the need for the money markets.

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2) Explain how the Federal Reserve can influence the federal funds interest rate.

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3) Explain why the money markets are referred to as wholesale markets.

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4) Explain why money market interest rates move so closely together over time.

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5) How are Treasury bills sold? How do competitive and noncompetitive bids differ?

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6) What are the main characteristics of money market securities?

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7) What are the major types of securities and who are the major participants in the money markets?

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8) Explain how and why repurchase agreements would be used.

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9) The size of the asset-backed commercial paper market nearly doubled between 2004 and 2007 to about $1 trillion. Discuss how the subprime meltdown and collapse of the ABCP market almost led to the collapse of the money market mutual fund market as well.

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