Questions from Financial Markets

Q: If I can buy a car today for $5,000

If I can buy a car today for $5,000 and it is worth $10,000 in extra income next year to me because it enables me to get a job as a traveling anvil seller, should I take out a loan from Larry the loan...

Q: Why aren’t most central banks more proactive at trying to use monetary

Why aren’t most central banks more proactive at trying to use monetary policy to eliminate asset-price bubbles?

Q: Why would it be better to lean against credit-driven bubbles

Why would it be better to lean against credit-driven bubbles and clean after other types of asset bubbles crash?

Q: According to the Greenspan doctrine, under what conditions might a central

According to the Greenspan doctrine, under what conditions might a central bank respond to a perceived stock market bubble?

Q: Which goals of the Fed frequently conflict?

Which goals of the Fed frequently conflict?

Q: “If the demand for reserves did not fluctuate, the Fed

“If the demand for reserves did not fluctuate, the Fed could pursue both a nonborrowed reserves target and an interest-rate target at the same time.” Is this statement true, false, or uncertain? Expla...

Q: Classify each of the following as either an operating target or an

Classify each of the following as either an operating target or an intermediate target, and explain why. a. The three-month Treasury bill rate b. The monetary base c. M2

Q: What procedures can the Fed use to control the three-month

What procedures can the Fed use to control the three-month Treasury bill rate? Why does control of this interest rate imply that the Fed will lose control of the money supply?

Q: If the Fed has an interest-rate target, why will

If the Fed has an interest-rate target, why will an increase in the demand for reserves lead to a rise in the money supply?

Q: “Interest rates can be measured more accurately and more quickly than

“Interest rates can be measured more accurately and more quickly than the money supply. Hence an interest rate is preferred over the money supply as an intermediate target.” Do you agree or disagree?...