Question

If the Federal Reserve estimates that the economy is operating at an employment level above full...

If the Federal Reserve estimates that the economy is operating at an employment level above full employment. It would be concerned about which of the following:

inflation falling below 2%

unemployment being to high

inflation increasing above 2%

it would not be concerned - the situation is consistent with it's dual mandate

Monetary policy is made by _______________ and its decisions change __________________.

the Treasury Department, prime interest rate

the Treasury Department, federal funds interest rate

the FOMC, federal funds interest rate

Congress, tax rate

Homework Answers

Answer #1

1. If the Federal Reserve estimates that the economy is operating at an employment level above full employment then it would lead to the inflation in the economy. As the equilibrium level is higher than its original equilibrium which means price level is higher in the economy. Therefore, inflation increasing above 2%. Option C is correct.

2. Monetary policy is made by the central bank and the Department of the Treasury is the national treasury of the federal government of the United States. Monetary policy decision effects the prime interest rate as it is an interest rate which used by banks to lend money to its customers with good credit. As if there is more money in the economy, then less interest has been charge and vice versa. Option A is correct.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The Federal Reserve has a dual mandate of full employment and price stability. Oftentimes this mandate...
The Federal Reserve has a dual mandate of full employment and price stability. Oftentimes this mandate is challenging as there is a short term trade-off between unemployment and inflation. From 2008 to 2015, however, inflation was consistently below the target rate while unemployment was well above its natural level. Should the Fed have pursued a more aggressive monetary policy to raise inflation and lower unemployment? Choose one from below and state which school of economics your answer is subscribing. Then,...
Question 1 The Federal Reserve considers ideal inflation rate to be a. 0% b. 1% c....
Question 1 The Federal Reserve considers ideal inflation rate to be a. 0% b. 1% c. 2% d. 3% e. dependent on current unemployment rate Question 2 The dual mandate given to the Federal Reserve by the Congress in 1978 means that the two goals the Fed focuses on are a. low employment and low inflation b. low employment and low output c. low unemployment and high output d. low unemployment and low inflation Question 3 Okun's Law relates a....
If the economy is full employment, an increase in aggregate demand will most likely lead to:...
If the economy is full employment, an increase in aggregate demand will most likely lead to: a reduction in the general level of prices an increase in unemployment an increase in real output, but not in prices an increase in prices, but not in real output. In order to reduce the rate of inflation in a rapidly growing, full-employment economy, it would be appropriate for the Federal Reserve to Increase income tax rates Sell government bonds Reduce reserve requirements Print...
Current monetary policy Go to the Web site for the Federal Reserve Board of Governors (www.federalreserve.gov)...
Current monetary policy Go to the Web site for the Federal Reserve Board of Governors (www.federalreserve.gov) and download the most recent monetary policy press release of the Federal Open Market Committee (FOMC). Make sure you get the most recent FOMC press release and not simply the most recent Fed press release. a. What is the current stance of monetary policy? (2018)(Note that policy will be described in terms of increasing or decreasing the federal funds rate as opposed to increasing...
When a bank repays a loan at the discount window to the Federal Reserve, it will...
When a bank repays a loan at the discount window to the Federal Reserve, it will __________ the monetary base by __________ bank reserves. Select one: a. decrease; decreasing b. increase; decreasing c. decrease; increasing d. increase; increasing The securities that the Federal Reserve holds on its balance sheet include Select one: a. ?US Treasury securities, federal agency debt, and privately issued mortgage-backed securities. b. ?privately issued stocks, US Treasury securities, and federal agency debt. c. municipal bonds, privately issued...
Current Federal Reserve policy focuses on interest rates, rather than on monetary aggregates, because ________. A)...
Current Federal Reserve policy focuses on interest rates, rather than on monetary aggregates, because ________. A) monetary aggregates do not provide clear or consistent signals to guide policymakers B) open market operations affect interest rates more directly than they affect monetary aggregates C) accor ding to the Fisher effect, the interest rate is a key determinant of the inflation rate D) all of the above E) none of the above
1. The Federal Reserve Act says that the Fed must try to achieve​ ______. A. a...
1. The Federal Reserve Act says that the Fed must try to achieve​ ______. A. a balanced budget B. maximum​ employment, stable​ prices, and moderate​ long-term interest rates C. a stable U.S. dollar on foreign exchange markets and moderate​ long-term and​ short-term interest rates D. an economic environment in which investment in U.S. stock and money markets is encouraged The Federal Reserve Act says that the Fed must use​ ______ to achieve its objectives. A. bank reserves B. commercial banks...
The monetary policy of the United States economy is the responsibility of: Select one: a. Federal...
The monetary policy of the United States economy is the responsibility of: Select one: a. Federal Reserve System. b. Federal Congress. c. Treasury Department. d. Banking and Finance Committee of the Federal Senate. Public debt is the amount of money that: Select one: a. the government of a country owes to the bondholders. b. states and municipal governments owe the Federal government c. residents of a country owe to foreigners. d. the government of a country owes to the taxpayers....
A possible reason that the Federal Reserve might raise interest rates in the economy is that...
A possible reason that the Federal Reserve might raise interest rates in the economy is that __________. A. there is a perception is that the economy is growing too strongly B. there is a fear that inflation will begin to increase soon C. there are some signs that wage gains are beginning to increase D. the level of unemployment has dropped below the natural rate of unemployment E. all of the above
Please Answer in detail. Go to the St. Louis Federal Reserve FRED database, and find data...
Please Answer in detail. Go to the St. Louis Federal Reserve FRED database, and find data on the personal consumption expenditure price index (PCECTPI), real GDP (GDPC1), an estimate of potential GDP (GDPPOT), and the federal funds rate (DFF). For the price index, adjust the units setting to “Percent Change From Year Ago” to convert the data to the inflation rate; For the federal funds rate, change the frequency setting to “Quarterly.” Download the data into a spreadsheet. Assuming the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT