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Recall that a goal of either Quantitative Easing or Quantitative Tightening is to adjust the yield curve. First, draw a yield curve graph similar to
Recall that a goal of either Quantitative Easing or Quantitative Tightening is to adjust the yield curve. First, draw a yield curve graph similar to the one from Part Three of the Quantitative Easing and Tightening Page. Your graph should show a base case yield curve with near zero near term interest rates and a steep increase to high interest rates in the long-term. Then decide if the Federal Reserve would choose with such a steep curve to utilize Quantitative Easing or Quantitative Tightening to stimulate the economy and draw a second line reflecting the desired impact on the yield curve, that is the yield curve the Federal Reserve would prefer
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