What does it mean to say that fed policy is easy

Reference no: EM131304191

In his history of the Federal Reserve, Allan Meltzer of Carnegie Mellon University describes the views of Federal Reserve officials in the fall of 1930: Most of the policymakers regarded the substantial decline in short-term market interest rates . . . as the main . . . indicators of the current position of the monetary system.... [Policy] was "easy" and had never been easier in the experience of the policymakers of the Federal Reserve System.

a. What does it mean to say that Fed policy is "easy"?

b. In the context of the early 1930s, were low nominal interest rates a good indicator that policy was easy? Why might Fed officials have believed that they were?

Reference no: EM131304191

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