Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Chapter 31, Problem 7SPA
To determine
Explain why the Fed was puzzled.
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24. Even with the power to change interest rates, the Fed is unable to directly impact inflation, output or
unemployment. This is because:
a.
Interest rates do not affect inflation, output and unemployment
Interest rates have no influence on the economy
b.
c. Interest rates determine the opportunity cost of spending money today
Inflation, output and unemployment are fixed
d.
e. None of these
Use the Front Page to answer three questions.
FRONT PAGE
Fed Raises Key Interest Rate
Washington D.C.-The Fed, as expected, raised the target rate on federal funds
from 2.25 to 2.5 percent today. Fed chair Jay Powell said the economy appeared
"healthy" and "solid" enough to accommodate a small increase in interest rates.
The Fed's goal is to keep inflation under control as the economy continues to
grow and unemployment falls to historic levels.
President Trump reacted immediately to the Fed action, calling it "foolish" and
"crazy" - an impediment to stronger growth and still more jobs.
Source: News reports of December 19-20, 2018.
Instructions: Round your response to two decimal places.
a. What was the Fed's target for the fed funds rate in late December 2018?
%
b. This was (Click to select) from the previous period.
c. This rate change would (Click to select) aggregate demand.
Chapter 31 Solutions
Macroeconomics
Ch. 31.1 - Prob. 1RQCh. 31.1 - Prob. 2RQCh. 31.1 - Prob. 3RQCh. 31.1 - Prob. 4RQCh. 31.2 - Prob. 1RQCh. 31.2 - Prob. 2RQCh. 31.2 - Prob. 3RQCh. 31.3 - Prob. 1RQCh. 31.3 - Prob. 2RQCh. 31.3 - Prob. 3RQ
Ch. 31.3 - Prob. 4RQCh. 31.4 - Prob. 1RQCh. 31.4 - Prob. 2RQCh. 31.4 - Prob. 3RQCh. 31.4 - Prob. 4RQCh. 31.4 - Prob. 5RQCh. 31 - Prob. 1SPACh. 31 - Prob. 2SPACh. 31 - Prob. 3SPACh. 31 - Prob. 4SPACh. 31 - Prob. 5SPACh. 31 - Prob. 6SPACh. 31 - Prob. 7SPACh. 31 - Prob. 8SPACh. 31 - Prob. 9SPACh. 31 - Prob. 10SPACh. 31 - Prob. 11SPACh. 31 - Prob. 12SPACh. 31 - Prob. 13SPACh. 31 - Prob. 14SPACh. 31 - Prob. 15SPACh. 31 - Prob. 16APACh. 31 - Prob. 17APACh. 31 - Prob. 18APACh. 31 - Prob. 19APACh. 31 - Prob. 20APACh. 31 - Prob. 21APACh. 31 - Prob. 22APACh. 31 - Prob. 23APACh. 31 - Prob. 24APACh. 31 - Prob. 25APACh. 31 - Prob. 26APACh. 31 - Prob. 27APACh. 31 - Prob. 28APACh. 31 - Prob. 29APACh. 31 - Prob. 30APACh. 31 - Prob. 31APACh. 31 - Prob. 32APACh. 31 - Prob. 33APACh. 31 - Prob. 34APACh. 31 - Prob. 35APACh. 31 - Prob. 36APACh. 31 - Prob. 37APACh. 31 - Prob. 38APACh. 31 - Prob. 39APACh. 31 - Prob. 40APACh. 31 - Prob. 41APA
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