Economics for Managers (Macroeconomics)

HW 3.1. Reading the minutes of the Federal Open Market Committee (FOMC).
The FOMC is the formal name of the group chaired by Bernanke (in the latest statement) that
meets every six weeks or so to set monetary policy in the United States. Immediately after the
meeting, the FOMC issues a ?statement?that consists of a few paragraphs summarizing its position.
Then, three weeks later, the FOMC releases the ?minutes?of its meeting. These minutes contain
extensive detail about the issues that were discussed in the meeting. Suppose your job is to explain
Federal Reserve policy to the CEO of a corporation. Go to the following web page and read the
minutes from the FOMC?s meeting on October 29-30, 2013 released on November 20. Then answer
the questions below.

http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

a) What action did the FOMC take, if any, regarding the level of the fed funds rate? Why did it
make this choice?
b) Pick a paragraph or two from the FOMC minutes and quote it in your answer (so I know
which paragraph you?ve chosen). Using the Short-RunModel, explain using graphs and words the
economic consequences of the events in the paragraph(s) you?ve quoted. You do not need to analyze
anything else in the economy; just focus on what you?ve chosen.
HW 3.2. Learning about European Central Bank.
a) Go to the European Central Bank?s (ECB) webpage and click on “Monetary policy”

http://www.ecb.int/mopo/html/index.en.html

What is the ECB objective?
b) Go to “Press” and look at the Statement made by the President before the press conference
(state the date of the statement you comment).
What action did the ECB take, regarding the level of the interest rate? Why did it make this
choice?
HW 3.3. Discuss the di¤erences in the objectives of the ECB and the FED. State the monetary
rule that characterizes best each of their objectives.