Question
On 16 th March 2020, the Federal reserve in the US announcedthat it will lower the primary credit rate by 150 basis points to 0.25
On 16thMarch 2020, the Federal reserve in the US announcedthat it will lower the primary credit rate by 150 basis points to 0.25 percentto support the US economy amid the coronavirus outbreak, effective March 16, 2020.
a.Please explain in detail the reasoning or theories behind the statement - "Federal Reserve could support the economy by cutting interest rates".
b.Please introduce the main instrument used by Federal Reserve to achieve its targeted interest rate.
c.Please explain how it works in detail.
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Practical financial management
Authors: William r. Lasher
5th Edition
0324422636, 978-0324422634
