Fed’s Evans: Offers Full Support for New Stimulus Federal Reserve Bank of Chicago President Charles Evans expressed strong support for the new stimulus provided by the central bank saying,

“This was the time to act” and adding, “I am optimistic that we can achieve better outcomes through more monetary policy accommodation.”

Source: The Wall Street Journal, September 18, 2012

a. Why, in the economic conditions of September 2012, was Charles Evans happy to see the Fed stimulating the economy?

b. What would be the effects of the Fed’s QE3 and other stimulative actions? Explain the immediate effects and the ripple effects.

c. What are the risks arising from greater monetary stimulus?