Task:
Did the Fed’s LSAPs succeed in bringing down U.S. long-term interest rates?
Purposes
This assessment is in alignment with the following learning outcomes:
A good understanding of the impact of quantitative easing on financial markets
Guidance
The question is whether the LSAPs were successful in bringing down long-term U.S. interest rates. You could start by defining the LSAPs and explaining the reasons why they were implemented during the crisis. Then you should answer the question clearly and provide plenty of evidence from various financial markets, such as Treasury bond market, corporate bond market and mortgage market to support your claim. When presenting evidence, you could briefly explain the methodologies used in different empirical studies to show your in-depth knowledge of the literature. Finally, you should explain why the LSAPs succeeded or failed in bringing down U.S. long-term interest rates, focusing on the channels through which the LSAPs were supposed to work.