How does the comments from the Fed affect the financial markets?
How?
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EconomieTertiary Education
This lesson contains 16 slides, with interactive quizzes and text slides.
Lesson duration is: 1 min
Items in this lesson
Question
How does the comments from the Fed affect the financial markets?
How?
Slide 1 - Slide
Chapter 16:
The Federal Reserve and Monetary Policy
Slide 2 - Slide
Objectives
Describe the signals of Fed to the financial markets
Analyze the information from the Fed
Discuss the actions of Fed affecting the financial markets
Slide 3 - Slide
Read the case study on page 504
Answer the questions given below
Slide 4 - Slide
Why does the Fed chairman need to develop strong communication techniques ?
Slide 5 - Mind map
Answer
If the Fed chairman is not completely clear when making statements, the
markets may respond in a negative way
Slide 6 - Slide
How does the Fed help the banking system?
Slide 7 - Open question
What message does the cartoon convey about how the Fed has been known to give information?
Slide 8 - Mind map
Answer
The Fed has not been completely clear in the way it delivers information.
Slide 9 - Slide
In what way might Bernanke be following in Greenspan’s footsteps?
Slide 10 - Open question
What kind of monetary policy did investors expect Bernanke to follow -expansionary or contractionary policy? Explain your answer.
Slide 11 - Mind map
Answer
contractionary policy, to combat inflation
Slide 12 - Slide
How do articles A and C illustrate the rational expectations theory?
Slide 13 - Open question
Based on these three sources and your own knowledge, how would you describe the differences and similarities between Greenspan and Bernanke and their impact on the market?
Slide 14 - Mind map
Answer
Bernanke’s speaking style seems to be somewhat more forthright than Greenspan’s, and the markets are having trouble working out exactly how to react to what Bernanke says.