International Economics

Order Description Question No. 1 • Quantitative Easing (QE) is a monetary policy in which a central bank purchases or other securities from the market to decrease interest rates and increase the supply of money. Quantitative easing increases the quantity of money in the economy by flooding commercial with capital in an attempt to increase lending and liquidity. • The following information is from International Business Times (April 4, 2012) “China has reacted to U.S. QE in the past by expressing dismay, primarily given the overweight U.S. dollar position in their foreign currency reserves.” (Source:https://www.ibtimes.com/exnet/chinese-reaction-fed-qe3-not-happy-797141 ) • Explain the dismay of Chinese government due to quantitative easing (QE) using the FOREX market model discussed in the class. Make sure that you consider the undervalued exchange rate of China while answering the question. Provide neat diagram(s) to explain your answer. Question No. 2 One of the goals of a Federated Government is to stimulate the economy. This may be achieved in three distinct steps. You are required to use 3 different grafts to indicate these three steps.