Assignment 2: The Multiplier EffectGo to â.federalreserve.gov/newsevents/press/monetary/20091216a.htm”>FRB: Press ReleaseâFOMC statementâDecember 16, 2009.â You should now find a press release from the Board of Governors of the Federal Reserve System, dated December 16, 2009, which discusses the decisions of the Federal Open Market Committee (FOMC) for that date.This release also states that the Federal Reserve is in the process of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. Additionally, the release states that the FOMC has decided to gradually reduce âthe paceâ of such Fed purchases. Discuss why you believe that the FOMC has made such a decision, and explain the consequences of such a decision on the economy.In your answer, discuss the Federal Reserveâs use of open-market operations to influence the money supply and the respective consequences of such actions. Include a discussion of the money multiplier effect in your response. Justify your conclusions and provide appropriate examples.Using Microsoft Word, submit your responses in the form of a short paper (1 Â½ – 2 pages).By Wednesday, April 27, 2016, submit your responses to the M4: Assignment 2 Dropbox.Assignment 2 Grading CriteriaMaximum PointsDiscussed in detail reasons for the FOMC decision to reduce the number of purchases of government securities.20Discussed the consequences of the FOMCâs decision on the economy.20Discussed the Federal Reserveâs use of open-market operations to influence the money supply.20Justified ideas and responses by using appropriate examples and references from texts, Web sites, and other references.20Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; displayed accurate spelling, grammar, and punctuation.20Total:100
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