Economics

Prepare a one page single spaced document in Microsoft Word. The email subject line should reflect the class: ECO 9713 and Case #2 Quantitative Easing. The attached document to the email should be a maximum of one page. The attached document should reflect your name, ECO 9713 and Quantitative Easing Case atop of the attached page.

Please ensure that all written submissions are in Arial or simple readable format. Handwritten assignments will not be accepted . Also, please proofread for format, organization, grammar, punctuation, and spelling.

The mandatory writing style for the case is “Bullet Point” format.

Requirements – Submission and Participation:

There are three questions for this case. The first question is required to be written and submitted per the requirements above.

For the second and third questions, please prepare your responses for class discussion. Do not submit your responses to the second and third questions. You will refer to your notes/responses during class discussion of the case. Please note that you are expected to participate in the class discussion for all three questions and may be called on.

Assignment Questions: Using the information in the case*

Submission:

1. In analyzing the economic and financial market impacts of the QE announcements, what are the probable reasons for the changes in behavior of:

· long-term interest rates,

· short-term interest rates,

· credit default swaps, and

· inflation expectations.

Hint: This question is asking for reasons, not a summary of the changes in the Tables. For example, 10 year Treasury yields declined 107 basis points in QE1. Why?

Class Participation:

2. Choose one sector of the economy and describe how QE may stimulate that sector. Examples of sectors: households, banks, corporations, etc.

3. The case reflects statements from several Federal Reserve and other officials regarding potential risks (costs) of QE. Choose one of these risks and describe why you do or do not think it was a potential risk.

*Note: Refer to the tables and exhibits in the case to support your analysis. Also, incorporate topics and theories we have covered this term and as reflected in the textbook