Monetary tightening or Monetary loosening
The Fed loosened monetary policy in various ways in 2007,
but has recently started tightening monetary policy again. Explain how each
instrument they have used works and whether it is a loosening or tightening
policy. (1 sentence explanation):
1) Lower the target federal funds rate: monetary tightening
or loosening?
2) Lower the cost of discount window lending: monetary
tightening or loosening?
3) The Fed pays banks a positive interest rate on the
reserves they hold at the Central Bank: monetary tightening or loosening?
4) Offer discount window access to a broader range of
financial institutions: monetary tightening or loosening?
5) Implementing an open market purchase of bonds: monetary
tightening or loosening?
6) Purchasing Mortgage-Backed Securities: monetary
tightening or loosening?
7) Purchasing medium maturity Treasury Bonds (QE2): monetary
tightening or loosening?
