review paper

Review Paper
Name
Institution affiliates
Question one
The gold standard is a system where a standard currency unit is a fixed of gold. The currency can be converted freely domestically or abroad.
The positives of gold standard
• It prevents the government from causing inflation through use of paper currency
• It provides a fixed pattern of foreign exchange
The negatives of gold standard
Gold standard may not provide adequate flexibility in the supply of money.
The country may not protect itself from inflation or deflation.
Question two
The monetary policy specifically in the US is conducted by US Federal Reserve. They should be independent of politics. The US Federal Reserve is free from politics. Independent central reserve is very important for achieving ultimate goals of economic stability (Cohn, 2007).
Question three
The monetary tools include open market operations, discount rates, minimum reserves and regulation of foreign exchange.
• Open market operations: The government uses this policy to sell when there is excess money supply or by its securities from the public when there is a shortage in the money supply.
• Discount rates: The Federal Reserve controls the money supply by setting the rates with the view to control the money supply.
Question four
The crisis of 2008 is the period of great recession where the US housing prices fell by 31.8 % with poor economic performance. Securities that were mortgaged backed required them …