Question
On March 15, 2020 the Federal Reserve's open market committee (the FOMC) has suddenly decided to lower the federal fund rate to zero and of
On March 15, 2020 the Federal Reserve's open market committee (the FOMC) has suddenly decided to lower the federal fund rate to zero and of 1% amid the Corona virus outbreak. This is the lowest interest rate at virtually zero since similar measures they had to take in 2010 to recover from 2008 Great Recession
The conventional monetary policy approach for effective policy objectives to achieve full employment by expanding the money supply aggressively during severe recession. Since the US economy has been hit hard by Covid-19 pandemic, the economy suddenly dropped from its best record of unemployment rate in 50 years to one of the worst conditions of losing job over 3-4 millions per week in March and April 2020
Question: After reading the transcript of the FOMC monetary policy statement about this extraordinary effort to the economic rescue, briefly but clearly explain the transmission mechanism how this lowest possible federal fund rate change would positively impact the current declining economy and jobs.
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