Why is it more difficult for the Fed to control the money supply today than it was fifty years ago?
What will be an ideal response?
The international financial markets are more global today. If the Fed decides to reduce the money supply, people can obtain dollars in international markets, offsetting the actions of the Fed. People can borrow in other currencies if they want more liquidity. The globalization of international money markets makes it more difficult for the Fed to control the rate of growth of the money supply in the United States.
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A competitive market is in equilibrium. Then there is a decrease in demand and a decrease in supply. The equilibrium price ________, and the equilibrium quantity ________
A) rises; decreases B) perhaps changes but we can't say if it rises, falls, or stays the same; decreases C) falls; increases D) perhaps changes but we can't say if it rises, falls, or stays the same; increases E) rises; increases
If government is to allocate resources efficiently, _____
a. competition among local governments should be limited in scope b. local governments should transfer powers to state governments whenever possible c. public goods should always be provided by the federal government d. public goods should be devolved to local governments whenever feasible