Financial Management Case Study Bailout Bonus


1.    Read “Bernanke fiddles while Obama burns” You will find the piece at CNN Money site
        Note: If you cannot the item with the provided link you can google the exact title and pull it up that way.

2.     Answer the following questions:

  • If the Fed were to launch a new round of “quantitative easing”—say a trillion dollar QE3 in line with that suggested in the column, how specifically would the Fed accomplish it?  That is, what is the process that the Fed would follow to carry out the QE3?
  • Once the Fed embarked on such a policy, how would it affect banks?  This must be specific.
  • How did QE1 and QE2 affect interest rates and the money supply?
  • How would this QE3 most likely affect the money supply and interest rates?  Justify your answer!
  • Exactly how would a QE3 affect the overall economy—including jobs, current inflation, inflation outlook, GDP, the housing market, etc.?  Again, justify your answer!


The assignment in finance is about the recent bailout after the 2008 recession. After much deliberation, the government agreed to extend support to the corporate sector by providing bailout. A news article is given and questions related to that article have been answered in the solution.

Total word count is 1072


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