English questions

1. Impact of Monetary Policy. How does the Fed's monetary policy affect economic conditions. 

2. Fed Control. Why may the Fed have difficulty controlling the economy in the manner desired? Be specific.

3. Fed's Control of Inflation. Assume that the Fed's primary goal is to reduce inflation. How can it use open market operations to achieve this goal? What is a possible adverse effect of such action by the Fed (even if it achieves the goal)?

4. Interpreting the Fed's Monetary Policy. When the Fed increases the money supply to lower the federal funds rate, will the cost of capital to U.S. companies be reduced? Explain how the segmented markets theory regarding the term structure of interest rates could in fluence the degree to which the Fed's monetary policy affects long-term interest rates.

5. Monetary Policy during the Credit Crisis. During the credit crisis, the Fed used a stimulative monetary policy. Why do you think the total amount of loans to households and businesses did not increase as much as the Fed had hoped? Are the lending institutions to blame for the relatively small increase in thetotal amount of loans extented to households and businesses.

6. Secondary Market for T-bills. Describe the activity in the secondary T-bills market. How can this degree of activity benefit investors in T-bills? Why might a financial institutions sometimes consider T-bills as a potential source of funds?  

7. Banker's Acceptances. Explain how each of the following would use banker's acceptances: (a) exporting firms, (b) importing firms, (c) commercail banks, and (d) investors.