The federal reserve cut interest rates dramatically

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a. "The Federal Reserve kept interest rates too low for too long after the recession of 2001; this is what fuelled the property bubble of the mid-2000s in the US." Is this statement true? Discuss.

b. The Federal Reserve cut interest rates dramatically in 2008 in response to the worsening credit crisis. Many emerging market countries were pegged to the dollar at this time. What happened during this period to the emerging economies of countries (most of which were still booming) that peg to the dollar? Is this consistent with what you might expect, given your knowledge of the disadvantage of pegged exchange rate systems as suggested by 'impossible trinity' theory?

Reference no: EM131166457

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