Over the last two years, the unemployment rate in Westerlight has risen from 4% to 8%, while GDP growth has been 1.5%. Milo, a citizen of Westerlight, currently doesn’t have a job and although he is actively searching, has been unable to find one. The Federal Reserve notices this change in the economy and decide to take steps to correct it. They can use their 4 tools in the following ways: a. What will the Federal Reserve do to open market operations? b. What will the Federal Reserve do to the reserve requirement? c. What will the Federal Reserve do to the discount rate? d. What will the Federal Reserve do to the interest on reserves? e. What impact will this have on loans from banks?
Over the last two years, the
The Federal Reserve notices this change in the economy and decide to take steps to correct it. They can use their 4 tools in the following ways:
a. What will the Federal Reserve do to open market operations?
b. What will the Federal Reserve do to the reserve requirement?
c. What will the Federal Reserve do to the discount rate?
d. What will the Federal Reserve do to the interest on reserves?
e. What impact will this have on loans from banks?
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