Money Policy And Interest Rate

Overview: The purpose of this paper is to use our understanding of the role the Federal Reserve System (the Fed) plays in stabilizing the economy and evaluating its recent actions in light of the state of the economy. You will be using various concepts that we have learned during this course and you would have covered in the Macroeconomics course, which is a pre-requisite for this course. Some of the concepts you will need to take into account are the yield curve, the Taylor rule, GDP, unemployment rate, inflation rate, the stock market, the bond market, etc. Instructions: On March 15, 2020, the Federal Open Market Committee decided to lower the federal funds rate range to 0% – 0.25% from 1% – 1.25%. It was the first time since December 2015 that the federal funds rate had dropped to 0% – 0.25%. It has remained at that level since then. 1. Do you agree or disagree with the cut in the federal funds rate? 2. Was the extent of the cut satisfactory or should it have been less if so, is there a minimum level below which the federal funds rate should not drop? 3. What are some of the macroeconomic indicators that you would use to support your arguments? 4. Do you think that the rate cut has had the desired effect on the economy? 5. Has the rate cut affected you personally in a positive or negative way? 6. Going forward where do you think are interest rates heading? 7. What would be an ideal federal funds rate? Requirements: • Minimum seven pages in length, excluding the Title and Reference page. • APA format, including an in-text citation for referenced works. • At least two resources