Question

Describe the Federal Reserve and Economic theories.

Based on the video, which economic theories were most clearly applied by the Federal Reserve in response to the economic crisis. Describe the connections between the Fed’s actions and the theories of Smith, Keynes, Hayek, or Friedman.

Answer 1

The Federal Reserve pursued policies that most closely followed the theories of Keynes and Friedman. Both economists argued that aggregate demand could be influenced through policies. They believed that this could help the economy recover or grow. The Fed seemed to follow Keynes's theories by taking action to intervene. It also seemed to follow Friedman's thinking by focusing on increasing the money supply through monetary policy.

Step-by-step explanation:

Answer 2

The Federal Reserve pursued policies that most closely followed the theories of Keynes and Friedman. Both economists argued that aggregate demand could be influenced through policies. They believed that this could help the economy recover or grow. The Fed seemed to follow Keynes's theories by taking action to intervene. It also seemed to follow Friedman's thinking by focusing on increasing the money supply through monetary policy.