Writing in the Wall Street Journal in 2012, a hedge fund manager observes: With inflationary expectations not
Question:
Writing in the Wall Street Journal in 2012, a hedge fund manager observes: “With inflationary expectations not yet unsettled by the Federal Reserve’s $2 trillion balance-sheet expansion, Mr. Bernanke has committed the Fed to an openended round of quantitative easing. . . .”
a. Why might “inflationary expectations” have been unsettled by the increase in the Fed’s balance sheet? Why weren’t inflationary expectations unsettled by the increase?
b. What does the author mean by Bernanke’s “open-ended round of quantitative easing”?
Would the Fed have been likely to engage in a third round of quantitative easing in 2012 if inflationary expectations had become unsettled? Briefly explain.
Step by Step Answer:
Money Banking And The Financial System International Edition
ISBN: 978-1292000183
2nd Edition
Authors: R. Glenn Hubbard ,Anthony P Obrien