Question 1

a)In recent years, the government has increased its role in financial markets. So explain the government intervention in financial markets with suitable examples.

b)"The federal open market committee assesses the economic conditions, and identifies its main concerns about the economy to determine the monetary policy that would alleviate its concerns. Its monetary policy changes the money supply in order to influence interstates, which affect the level of aggregate borrowing and spending by households and firms."In the spectrum explain the effects of a simulative monetary policy. Also explain why a simulative monetary policy might fail.