Here are several statements from the business press. Outline your understanding of each, including the chain of events, using diagrams or flowcharts, such as those employed in class, if appropriate:
a) â€œThe argument that it is impossible to shrink the Fedâ€™s balance sheet [bloated by quantitative easing] to prevent excessive monetary expansion is nonsense. The Fed has tools at its disposal to do soâ€. (Suggest at least two such tools and explain how they might work).
b) â€œIf the Bank of Canada lowers its target rate of inflation, it would have a profound impact on Canadian bond prices and dividend-paying stocksâ€
c) â€œThe Bank of Canadaâ€™s monetary policy can keep inflation at 2% or any other target rate it choosesâ€
d) â€œThe 2008-2009 recession had its origin in the collapse of US housing pricesâ€
e) â€œThe Federal Reserve Board [the US central bank] intervention can put a floor under the US dollar [meaning the exchange rate of the U.S. dollar], but some of its policy instruments have limitations and others have potential negative side effectsâ€. Discuss two policy instruments and their limitations and/or negative side effects