If the goal of a monetary policy was to stabliize output at full employment and promote price stability then what would that policy look like if the federal reserve thought the natural rate of employment was 5% when it was actually 6%. I don't see how this would affect price stability or how they would stabilize

How does the federal government reduce interest rate? What happens to interest rate and quantity of money as a result of expansionary monetary policy? Please explain using a diagram of interest rates vs quantity of money. showing the relevant shifts in the supply and demand curve.

The United States Federal Reserve has two mandates when setting monetary policy - keep annual inflation low (around 2-3%) and the unemployment rate low (around 5%).  Typically, efforts to adjust the money supply to cause inflation to decrease causes unemployment to increase and vice versa. Now, imagine a situation where the United States faces high inflation and high unemployment (called stagflation, was issue in late 1970s).  What do you think the Federal Reserve should do in this situation?

To encourage spending to offset a lower demand for goods and services, the government will implement easy monetary policy by increasing the interest rates to encourage more savings. * TRUE or FALSE?