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Help me reply classmate post When interest rates are already very low, there may be less incentive for businesses and consumers to borrow and spend,
Help me reply classmate post When interest rates are already very low, there may be less incentive for businesses and consumers to borrow and spend, as the cost of borrowing is already low and the effectiveness of expansionary monetary policy through open market purchases may be limited. The Fed has responded to this quandary by implementing other unconventional monetary policy tools in addition to open market purchases. For example forward guidance and yield curve control. They have conducted the nation's monetary policy by managing the level of short-term interest rates and influencing the availability and cost of credit in the economy. The Fed's policy in response to the Great Recession I believe as been effective. It reduced the reserve requirements and lowered the discount rate to stimulate economic growth. The Fed used various monetary policy tools to suppress unemployment rates and create a reinflation of prices. It is obvious that no one wants to see prices rise, but I do believe having a low unemployment rate is import to our economy
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