Answer one of the following 2 questions below. Your answer should be no more than 400 – 600 words(12 front, single space) in total:
1. The Federal Reserve is currently deploying two major policy tools to counteract the recession, 1) lowering the Federal Funds interest rate; and 2) Lender-of-Last-Resort operations. Describe how both policy tools work. Explain whether you think either them, or both of them, are likely to be effective within the present circumstances.
2. Former U.S. Treasury Secretary and Harvard University economist recently offered this assessment of the current economic crisis:
”The recovery can be faster than many people expect because it has the character of the recovery from the total depression that hits a Cape Cod economy every winter or the recovery in American GDP that takes place every Monday morning.”
Provide an evaluation of Summers’ assessment, based on the evidence we have reviewed in class and in your sections, as well as the materials you have been reading on the pandemic and economic crisis.