Company Predict the Value and Term Paper

Total Length: 306 words ( 1 double-spaced pages)

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Finally, the Fed may raise interest rates to curtail inflation, which may make consumers more reluctant to borrow and make large purchases, regardless of consumer confidence.

Do Alan Greenspan's statements suggest monetary policy is ineffective?

Greenspan's comments hardly indicate that all monetary policies are ineffective. Witness the recent effects that the Federal Reserve's increases in the interest rate have had on the economy, and how the lowering of interest rates to historical levels in the wake of 9/11 encouraged greater borrowing on the part of consumers.
However, Greenspan does believe that the Fed can neither account for, nor predict or control every dip and rise in the emotional temperature of consumers. To defuse 'bubbles' or overly exuberant and irrational consumer confidence, aggressive rather than conservative 'tweaking' in the interest rate is required and the Fed must have confidence in its perception of the needs of the economy to….....

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