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During the Great Recession which deepened after the financial crisis of 2008-9, the Federal Reserve employed an array of unconventional monetary policy actions in an

During the Great Recession which deepened after the financial crisis of 2008-9, the Federal Reserve employed an array of unconventional monetary policy actions in an attempt to halt the contraction and rejuvenate the economy.

  1. Define conventional monetary policy and explain how the Fed typically uses it to manage the US macroeconomy.
  2. Explain why conventional monetary policy ceased working after the financial crisis in 2008-9.
  3. List three unconventional monetary policy actions taken by the Federal Reserve and explain how these actions promoted economic recovery.
  4. Use the model of the yield curve from Mishkin to explain how and why these unconventional monetary policies effected interest rates at which firms borrowed when investing and thus economic activity.
  5. Use the quantity theory to explain why conventional monetary stopped working after the financial crisis in 2008 and why unconventional monetary policy helped the economy recovery from 2009 through 2014.

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