Illustrate the situation in the united states

Reference no: EM131305398

We have seen that Federal Reserve Chairman Ben Bernanke has argued that low interest rates in the United States during the mid-2000s were due to a global savings glut rather than to Federal Reserve policy.

In an interview with Albert Hunt of Bloomberg Television, Alan Greenspan, who was Federal Reserve Chairman from August 1987 through January 2006 made a similar argument. Greenspan argued, "Behind the low level of long-term rates: a global savings glut as China, Russia and other emerging market economies earned more money on exports than they could easily invest."

a. Use loanable funds graphs to illustrate Greenspan's argument that a global savings glut caused low interest rates in the United States. One graph should illustrate the situation in the United States, and the other graph should illustrate the situation in the rest of the world.

b. Why should a debate over the cause of low interest rates matter to Alan Greenspan?

Reference no: EM131305398

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