Federal Reserve System
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Questions and Answers

Welke van de volgende doelstellingen was een oorspronkelijke reden voor de oprichting van de Federal Reserve?

  • Het invoeren van een elastische valuta
  • Het maximaliseren van werkgelegenheid
  • Het behalen van financiële stabiliteit
  • Het vermijden van bankpanieken (correct)
  • Welke van de volgende hulpmiddelen wordt gebruikt om de geldhoeveelheid te beïnvloeden?

  • Open Market Operations
  • De discount rate
  • Alle bovenstaande (correct)
  • Reserve Requirements
  • Wat was de reactie van de Federal Reserve tijdens de Grote Depressie?

  • De Fed was pas later opgericht en had geen rol in de crisis
  • De Fed nam snelle en effectieve maatregelen om de crisis te bestrijden
  • De Fed was opgeheven tijdens de crisis
  • De Fed reageerde traag en nam restrictieve maatregelen (correct)
  • Welke van de volgende frameworks wordt gebruikt door de Federal Reserve voor het bepalen van het monetaire beleid?

    <p>Alle bovenstaande</p> Signup and view all the answers

    Welke van de volgende crises was een belangrijke testcase voor de Federal Reserve?

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    Study Notes

    Founding

    • Established on December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act
    • Created to address banking panics and monetary policy weaknesses that led to economic instability
    • Original purpose:
      • Provide an elastic currency (able to expand and contract as needed)
      • Prevent banking panics and maintain financial stability
      • Supervise and regulate banking institutions
      • Act as a lender of last resort during times of financial stress

    Monetary Policy

    • Dual Mandate: maximize employment and price stability (low inflation)
    • Tools used to implement monetary policy:
      • Open Market Operations (buying/selling government securities to increase/decrease money supply)
      • Discount Rate (interest rate at which banks borrow from the Fed)
      • Reserve Requirements (percentage of deposits banks must hold in reserve)
    • Monetary Policy Objectives:
      • Inflation targeting: keep inflation low and stable
      • Maximum employment: promote job growth and low unemployment
    • Frameworks:
      • Taylor Rule: guideline for setting interest rates based on inflation and GDP growth
      • Forward-Looking Policy: considering future economic conditions when making policy decisions

    Crisis Response

    • 1913-1920s: Early years marked by struggles to establish credibility and respond to World War I financing needs
    • Great Depression (1929-1939):
      • Fed's slow response and restrictive policies exacerbated the crisis
      • Led to significant reforms, including the Banking Act of 1935
    • 1970s-1980s:
      • High inflation and unemployment led to the appointment of Paul Volcker as Chairman
      • Tight monetary policy (high interest rates) to combat inflation
    • 2007-2008 Global Financial Crisis:
      • Unconventional monetary policies, including quantitative easing and forward guidance
      • Emergency lending facilities and stress tests to stabilize the financial system

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    Test your knowledge of the Federal Reserve System, its history, monetary policy, and crisis response. Learn about the Federal Reserve's dual mandate, tools, and objectives.

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