Principles Of Macroeconomics

Suppose that the Federal Reserve ended all measures designed to change interest rates and instead allowed rates to be determined by markets. What would the advantages and disadvantages of this be?

In addition to contributing your own answer by Saturday, please provide a thorough, thoughtful response to at least one classmate by Tuesday.



The changes in the Fed Reserve advantages are rule based systems have to help the central bank explain the actions to the public and assist the market with prediting what the Fed will do. Low interest rates benefit deborts at the expense of creditors is a monetary policy which has a powerful impact on people lives. Market observers spend a huge amount of resources trying to see what the Feds will do, but having a clear rule-based system saves a lot of collective time and money. The disadvantages are a damper on the economy and people businesses because its makeing it less expensive to borrow money. If the Fed Reserve lower the intrest rates targets to spur the economy out of recession. Businesses and consumers will borrow more and buy more things when the interest rates are low. I think the interest rates should be balanced out.

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