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MGMT 673 Global Economic Analysis

Assignment
2: The Central Bank
Due Date

This assignment is due by the end
of Module 4.

Objective

During the recent Great Recession, U.S. Federal Reserve Board Chairman
Ben Bernanke applied lessons learned from the Great Depression of the 1930s in
which government policies failed to bring the U.S. and the world out of an epic
economic slump. Under Bernankes
leadership, the Federal Reserve acted aggressively to stem the downturn that
began in the summer of 2008. The objective of this written assignment is to
gain a greater understanding of the central banks role in managing the economy
and, specifically, the actions taken by the U.S. Federal Reserve System to
combat the Great Recession.

Directions

Summarize the increasingly aggressive steps the
Federal Reserve employed beginning in the summer of 2008 to increase liquidity
in the U.S. economy. The deliverables should cover the following points:

1. Circumstances
that prompted intervention,

2. Actions
taken,

3. Objective
and economic rationale,

4. Process
including how the Fed paid for the financial assets it purchased, and

5. Effect on
the monetary base, money supply and interest rates.

Include
graphic illustrations of the monetary base, M2 money supply and short term
interest rates over a suitable period of time to provide a visual historical
perspective. Conclude with a short analysis of the Feds actions. Given the
tools available at the time, was the Fed successful in meeting its objectives?
Finally, discuss the possible dangers that lie ahead in the wake of the Feds
actions since 2008 and recommend how it might gradually reduce its heightened
intervention in the U.S. economy.

Thousands of articles and commentary have been published on the Feds
response to the Great Recession. While you are welcome to use any resource,
your primary source should be the Feds own statements. Short monetary policy
statements are published after each meeting of the Federal Open Market
Committee. Other important statements were published as joint statements with
other Federal agencies. All are included in the collection of Press Releases.
Unfortunately, it does take some browsing to find the ones of interest. Go to
the Board of Governors of the

Revised 05/06/14

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Federal
Reserve System, then to News & Events on the menu. Next, click on Press
Releases and then Monetary Policy from the expanded menu. Select 2008 from the
drop down menu and look for FOMC statement, the first was issued on January
22, 2008. Following this procedure, review the statements from 2008 through
2010 to obtain a chronology of Fed actions. While it is worthwhile to review
all of the statements they are short – the dates of Press Releases announcing
a significant change in Fed policy or economic assessment are listed at the
bottom of this assignment guidance. Most are policy statements, but a few are
joint statements.

The Federal Reserve Bank of St. Louis publishes data and charts of the
money supply and interest rates. To gain an appreciation for what is available,
go to its website and select Publications/Research and Data/Monetary
Trends/Current Issue and review the wealth of monetary charts. While it is
acceptable to use screen shots of charts from this resource, the preferred
method is to customize the desired charts. The St. Louis Bank makes this easy.
From the Federal Reserve Bank of St. Louis homepage, search for FRED (Federal
Reserve Economic Data). Browse FRED and youll find that its easy to produce
and download customized charts.

Your paper should be in APA format and include a title page, running
head, page numbers, appropriate headings, citations of sources, a references
listing and any appendices. The paper should not be longer than four pages not
including the title page, reference listing, and appendices. Book length
analyses of been published on this general topic, so keep the paper narrowly
focused, concisely written, and in your own words (a series of quotations from
the Fed press releases does not demonstrate an understanding of the Feds
policies).

FOMC statements of particular
interest:

1/22/08; 3/11/08; 9/16/08; 10/8/08; 10/14/08 (Joint Statement by
Treasury, Federal Reserve, and FDIC); 10/29/08; 11/25/08 (2 statements);
12/16/08; 3/23/09 (Joint Statement); 6/24/09; 12/16/09; 1/27/10; 11/3/10; 12/

14/10

Revised 05/06/14.gif”>MGMT 673 Global Economic AnalysisAssignment
2: The Central BankDue DateThis assignment is due by the end
of Module 4.ObjectiveDuring the recent Great Recession, U.S. Federal Reserve Board Chairman
Ben Bernanke applied lessons learned from the Great Depression of the 1930s in
which government policies failed to bring the U.S. and the world out of an epic
economic slump. Under Bernankes
leadership, the Federal Reserve acted aggressively to stem the downturn that
began in the summer of 2008. The objective of this written assignment is to
gain a greater understanding of the central banks role in managing the economy
and, specifically, the actions taken by the U.S. Federal Reserve System to
combat the Great Recession.DirectionsSummarize the increasingly aggressive steps the
Federal Reserve employed beginning in the summer of 2008 to increase liquidity
in the U.S. economy. The deliverables should cover the following points:1. Circumstances
that prompted intervention,2. Actions
taken,3. Objective
and economic rationale,4. Process
including how the Fed paid for the financial assets it purchased, and5. Effect on
the monetary base, money supply and interest rates.Include
graphic illustrations of the monetary base, M2 money supply and short term
interest rates over a suitable period of time to provide a visual historical
perspective. Conclude with a short analysis of the Feds actions. Given the
tools available at the time, was the Fed successful in meeting its objectives?
Finally, discuss the possible dangers that lie ahead in the wake of the Feds
actions since 2008 and recommend how it might gradually reduce its heightened
intervention in the U.S. economy.Thousands of articles and commentary have been published on the Feds
response to the Great Recession. While you are welcome to use any resource,
your primary source should be the Feds own statements. Short monetary policy
statements are published after each meeting of the Federal Open Market
Committee. Other important statements were published as joint statements with
other Federal agencies. All are included in the collection of Press Releases.
Unfortunately, it does take some browsing to find the ones of interest. Go to
the Board of Governors of theRevised 05/06/14.gif”>Federal
Reserve System, then to News & Events on the menu. Next, click on Press
Releases and then Monetary Policy from the expanded menu. Select 2008 from the
drop down menu and look for FOMC statement, the first was issued on January
22, 2008. Following this procedure, review the statements from 2008 through
2010 to obtain a chronology of Fed actions. While it is worthwhile to review
all of the statements they are short – the dates of Press Releases announcing
a significant change in Fed policy or economic assessment are listed at the
bottom of this assignment guidance. Most are policy statements, but a few are
joint statements.The Federal Reserve Bank of St. Louis publishes data and charts of the
money supply and interest rates. To gain an appreciation for what is available,
go to its website and select Publications/Research and Data/Monetary
Trends/Current Issue and review the wealth of monetary charts. While it is
acceptable to use screen shots of charts from this resource, the preferred
method is to customize the desired charts. The St. Louis Bank makes this easy.
From the Federal Reserve Bank of St. Louis homepage, search for FRED (Federal
Reserve Economic Data). Browse FRED and youll find that its easy to produce
and download customized charts.Your paper should be in APA format and include a title page, running
head, page numbers, appropriate headings, citations of sources, a references
listing and any appendices. The paper should not be longer than four pages not
including the title page, reference listing, and appendices. Book length
analyses of been published on this general topic, so keep the paper narrowly
focused, concisely written, and in your own words (a series of quotations from
the Fed press releases does not demonstrate an understanding of the Feds
policies).FOMC statements of particular
interest:1/22/08; 3/11/08; 9/16/08; 10/8/08; 10/14/08 (Joint Statement by
Treasury, Federal Reserve, and FDIC); 10/29/08; 11/25/08 (2 statements);
12/16/08; 3/23/09 (Joint Statement); 6/24/09; 12/16/09; 1/27/10; 11/3/10; 12/14/10Revised 05/06/14