MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Chapter 16, Problem 3DQ
To determine
To describe: Impact on
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Let’s pretend the economy is in a horrible recession, inflation is rising, and interest rates are sky-high. As the chair of the Fed, what monetary role are you going to take? Why?
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- Please select ONE of the following questions as your discussion topic and respond with a paragraph or two that directly answers the question AND makes reference to class materials. For full credit, you must also respond to the posts of at least two of your classmates. 1. The Federal Reserve Board has enormous power over people's lives with its power to set and influence policy that determines monetary policy in the United States. Do you think this is proper for a democracy to provide the FED with so such power? How is the FED held accountable?arrow_forwardThe FED is facing a problem of unemployment. What policy should be used? How would each of the tools at the FED's disposal be used?arrow_forwardA mission of the Federal Reserve is to promote a combination of low interest rates and low unemployment. Why can it be difficult to accomplish both of these at the same time?arrow_forward
- The former chairman of the Federal Reserve, Alan Greenspan, used the term "irrational exuberance" in 1996 to describe the high levels of optimism among stock market investors at the time. Stock market indexes such as the S&P Composite Price Index were at an all-time high. Some commentators believed that the Fed should intervene to slow the expansion of the economy. Why would central banks want to clamp down when the economy is growing?arrow_forwardpick one of the four tools the Fed uses to conduct monetary policy and discuss how it causes a change in interest rates in the US economy.arrow_forwardDuring times of rising inflation, the Fed will undertake monetary policy or "tight money policy."arrow_forward
- If you were to survey central bankers from around the world and ask them what they believe the primary task of monetary policy should be, what would the most popular answer likely be?arrow_forwardYou will answer the following questions listed below. You will submit a Word document that will answer the following questions. Please submit your work using proper APA formatting. What actions should the Fed take if it believes the economy is about to experience a high rate of inflation? Now, let’s assume you are the President of the Fed and you have to make certain decisions in our economy. If the Fed orders a contractionary monetary policy, describe what will happen to the following variables relative to what would have happened without the policy: The money supply Interest rates Investment Consumption Net Exports The aggregate demand curve Real GDP The price level It should be minimum 3 word count with work cited page please.arrow_forwardAre you concerned about the inflation come back due to such easy monetary policy with zero interest rate for long time? if so, how fast is the Fed supposed to tighten its monetary policy as an normalizing strategy?arrow_forward
- give your recommendation on monetary policy as if you were President of the Dallas Federal Reserve Bank. Should interest rates be raised, lowered, or stay the same (neutral position)? Support your decision with specific findings from the report.arrow_forwardThe financial crisis of 2007-09 resulted in immediate action by the Fed to cut interest rates. Two or three months later some economic commentators complained that the Federal Reserve’s policies had obviously failed to turn the economy around because things were still getting worse. Was this a fair complaint against the Fed?arrow_forwardWhat is the appropriate monetary policy to be implemented by the Federal Reserve System during periods of high inflation? Explain the steps the Fed will take.arrow_forward
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