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28 Sep 2019
Suppose you are in charge of monetary policy. Assume your goals are a full employment level of production with price stability. Assume further the economy has excess capacity with unemployment at 7.8% (the natural rate is 5.2%), but you are concerned that past policy has raised the concern that inflation and inflationary expectations is beginning to rise. Past monetary policy has been to lower the federal funds rate through expansionary monetary policy, which has increased bank reserves. Explain completely, referring to your tools of monetary policy, operating targets, intermediate target, and your goals of policy, the type of monetary policy you would recommend to the FOMC and why you have given that recommendation.
Suppose you are in charge of monetary policy. Assume your goals are a full employment level of production with price stability. Assume further the economy has excess capacity with unemployment at 7.8% (the natural rate is 5.2%), but you are concerned that past policy has raised the concern that inflation and inflationary expectations is beginning to rise. Past monetary policy has been to lower the federal funds rate through expansionary monetary policy, which has increased bank reserves. Explain completely, referring to your tools of monetary policy, operating targets, intermediate target, and your goals of policy, the type of monetary policy you would recommend to the FOMC and why you have given that recommendation.
Joshua StredderLv10
28 Sep 2019
