Current Event Report 3 You will be assigned current event report writing throughout the semester. The topics selected may or may not relate to that week’s reading but will be related to economics. This is to gauge your general understanding of the current economic events that take place every day in our lives. It is to force you to think out of the box; broaden your horizon and to do some research besides reviewing your text book. Instructions: 1. 2. 3. 4. Write 1-2 pages on the given topic. You can include addendums but that will not be considered as a part of the report. Please use 11-12 font size. Attach your report via BB; open the folder and there is an option to attach your report. Review the News clip: “The Federal Reserve unleashed much of its arsenal Sunday to combat the economic damage caused by the coronavirus, cutting short-term interest rates to zero, renewing its crisis-era bond purchases to pump cash into the financial system and encouraging more bank loans to households and businesses. The moves, which were cheered by President Donald Trump, are aimed at combating a now-likely U.S. recession. "The virus presents significant economic challenges," Powell told reporters on a teleconference. "We've taken a number of actions to support American families and the economy overall." Central bank policymakers agreed to lower the Fed’s benchmark federal funds rate by a full percentage point to a range of zero to 0.25% -- where it hovered for years during and after the 2008 financial crisis. “The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” the Fed said in a statement. “The effects of the coronavirus will weigh on economic activity in the near-term and pose risks to the economic outlook.“ The Fed already had cut its key rate by half percentage point earlier this month. Many economists expected the central bank to agree to another percentage point cut at a meeting that had been set for this week, but the Fed decided to move early in a historic show of force. The central bank is also renewing its bond buying campaign, saying it will purchase $500 billion in Treasury bonds and $200 billion in mortgage-backed securities. Powell said the Fed is acting chiefly to inject cash into a Treasury markets that had become gummed up as investors fears grow. That market is critical to a well-oiled financial system. The Fed said it will reinvest those proceeds instead of letting them roll off its books.” Review the News Clip given above and then answer the following questions: 1. Are the FEDS correct in decreasing the Interest rates? Why or why not? 2. What type of monetary policy is associated with such an action taken by the FEDS? Discuss the policy in short. 3. Why do the Presidents not intervene in FEDS decisions? What is meant by “loose monetary policy”? Give examples to support your answer.
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