ECN 506 Chapter Notes - Chapter 10-18: Potential Output, Excess Reserves, Money Multiplier
4 Apr 2015
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Assignment package 2 (weightage 20% of the total marks) total 44 marks. A credit easing policy is an approach to increase the money supply in the economy. When interest rates can no longer go any lower, credit easing, along with quantitative easing, may be considered as options to expand the size of the central bank"s balance sheet and inject cash into the economy. With credit easing, the focus is on the credit market, such as commercial papers and mortgage backed securities. The credit easing tools used in response to the current financial crisis have focused on the asset side of the fed"s balance sheet. The tools can be categorized into: lending to financial institutions, providing liquidity to key credit markets, and purchasing long-term securities. Lending to financial institutions includes policies such as the term auction. Facility, the term securities lending facilities, and the primary dealer credit facility.
