Question: The Fed has pledged to support smooth market functioning and effective transmission of monetary policy. (a) Discuss how the Fed may use reserve ratio to

The Fed has pledged to support smooth market functioning and effective transmission of monetary policy.

(a) Discuss how the Fed may use reserve ratio to implement an expansionary monetary policy. (4 marks)

(b)Explain why the Fed's balance sheet has reduced in 2018-2019. How would you expect the trend of Fed's asset size in the coming months?(5 marks)

(c)What are the three statutory objectives for monetary policy set by the Fed?(3 marks)

(d) What is IOR? How does it affect the fed funds rate?(5 marks)

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