How does this policy affect the supply of and demand for products and services

How does this policy affect the supply of and demand for products and services

Review the information available on the following websites:

Money, Interest Rates, and Monetary Policy:http://www.federalreserve.gov/faqs/money-rates-policy.htm

Currency and Coin: http://www.federalreserve.gov/faqs/currency-coin.htm

Monetary Policy and Bank Lending: http://www.nber.org/chapters/c8334.pdf

Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory: http://qje.oxfordjournals.org/content/115/1/147.short

The Federal Reserve in the 21st Century:http://www.newyorkfed.org/education/fed21/

Use these sites to answer the following questions:

Summarize the recent policy of the Federal Reserve concerning the level of interest rates and the reasons for this policy.  Do you agree with this policy?  Why or why not?

How does this policy affect the supply of and demand for products and services?

What problems can arise when interest rates are kept very low for an extended period of time?  Please include historical examples (including at least one biblical example) of the impact of low interest rates and their effect on the economy.

You must incorporate a minimum of three sources in addition to the text in this assignment.  Your three sources may include scholarly sources, credible newspapers, trade journals, or websites listed here.  Be sure to use OCLS to find these sources.

………….Answer Preview……………..

The current interest rate policy is that of low interest for the federal funds. The present target range for government assets is zero to ¼ percent. The Federal bank has held the interest rates at a benchmark of about zero for practically the last six years (Osborne, King, and Insley, 2012). The approach was basically formulated after the financial crisis of 2007. The previous prospering economy of the USA confronted a severe financial downturn. The strategy of keeping the financing costs at most minimal conceivable levels….

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