Monetary Recovery: Explorations

5. The reading mentions a number of episodes that the Fed reacted to: run on Continental Illinois in 1984, the stock market crash in October of 1987, the liquidity problems of Long Term Capital Management in September of 1998, and the threat of cash withdrawals from the banking system as the result of fears of the so-called millennium bug in January 2000.

What happened in each of these cases? What did the Fed do? (You may have to go to the library or the Internet to dig out the details.)

6. In using interest rates as targets for monetary policy, economists often talk about the neutral rate. Here is a problem on the neutral rate.

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