In conducting monetary policy, the European Central Bank (ECB) must balance the needs of euro-area countries with differing economic conditions. Plot since 1990 the yield spread between government bonds in Italy (FRED code: INTGSBITM193N) and Germany (FRED code: INTGSBDEM193N), along with the yield spread between government bonds in Spain (FRED code: INTGSBES193N) and Germany. Discuss the yield spreads after 2008 and explain how they reflect policy challenges for the ECB.
Answer to relevant QuestionsName two distinct financial markets and describe the kind of asset traded in each. Many people believe that, despite ongoing financial innovations, cash willalways be with us to some degree as a form of money. What Core Principle couldjustify this view?You are the owner of a small sandwich shop. A buyer may offer one of several payment methods: cash, a check drawn on a bank, a credit card, or a debit card. Which of these is the least costly for you? Explain why the others ...Assuming no interest is paid on checking accounts, what would you expect to see happen to the relative growth rates of M1 and M2 if interest rates rose significantly?How important is the balance sheet channel of monetary policy? Plot since 1996 the net tightening of credit standards for consumer and credit card loans (FRED code: DRTSCLC) and (on the right scale) household net worth (FRED ...
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