Mester: More Fiscal Action Won’t Justify Fed Pull-Back

The video discusses the economic challenges faced by the Federal Reserve in 2020 due to the pandemic and the outlook for 2021, including the impact of the Democratic Senate majority on economic stimulus. It covers the Fed's monetary policy, inflation expectations, and the potential risks of financial instability and stock market bubbles. The video also touches on the rise of cryptocurrencies and the Fed's exploration of digital currencies.

What was the Federal Reserve's main challenge in 2020?

• Managing inflation

• Preventing a financial crisis

• Reducing interest rates

• Increasing employment

What is the Federal Reserve's outlook for the second half of 2021?

• Increased unemployment

• Higher inflation

• A stronger economy

• A weaker economy

How did the Federal Reserve and fiscal authorities complement each other during the pandemic?

• By both focusing on fiscal policy

• By both focusing on monetary policy

• By reducing taxes

• By using different tools to support the economy

What is the potential impact of additional stimulus in 2021?

• Lower inflation

• Higher unemployment

• Increased interest rates

• Reduced need for monetary policy support

What is one of the purposes of bond purchases by the Federal Reserve?

• To increase inflation

• To decrease GDP

• To manage long-term rates

• To reduce employment

What is the Federal Reserve's stance on changing its policy in response to short-term economic data?

• It will react immediately

• It will be patient and forward-looking

• It will increase interest rates

• It will ignore the data

What is a potential risk of maintaining an accommodative monetary policy for a long time?

• Lower GDP

• Deflation

• Asset bubbles

• Increased unemployment

What tool could the Federal Reserve use to prevent a stock market bubble?

• Adjusting margin requirements

• Reducing taxes

• Increasing interest rates

• Increasing government spending

What is the Federal Reserve's current stance on developing a digital currency?

• It plans to launch one next year

• It has no interest in digital currencies

• It is actively developing one

• It is studying the implications but not ready to set one up

What is driving the current surge in interest in cryptocurrencies?

• Lower interest rates

• Decreasing inflation

• Institutional investors getting involved

• Government regulations