Question

Headline: “Fed’s Kaplan Says Monetary Policy Has Reached Limits for Bolstering Growth

ALBUQUERQUE -- Federal Reserve Bank of Dallas President Robert Kaplan called for “structural reforms and other fiscal policy” to help jump-start the U.S. economy, which he said would give the central bank more “operating room” to raise interest rates.

In a question-and-answer session at a community banking conference in Albuquerque, N.M., Kaplan said the nation’s second-quarter growth in gross domestic product was disappointing though not surprising, given sluggish global demand.

The U.S. economy grew 1.2% in the second quarter, less than the 2.6% that had been expected by economists in a Wall Street Journal survey. Kaplan said the numbers underscore the sluggish growth with which the U.S. and global economies have been since the financial crisis.

Kaplan said accommodative monetary policy was causing distortions in the market. But he said the Fed must be cautious about raising rates when growth is still sluggish.

He said monetary policy can’t do much more to kick-start the economy, and instead called for investments in infrastructure or more immigration to help replenish an aging workforce.

Answer the questions below

Expansionary or contractionary	Explain the tools or actions being used

Answer 1

expansionary monetary policy has been used to raise the growth rate in the economy .

tools used : money supply has been increased to bolster economic growth . Tool of interest rate has also been used to affect growth . Since the results have not been achieved suggestion for expansionary fiscal policy through investment in infrastructure is being considered . Also idea of increasing the workforce through immigration is being considered to increase aggregate supply and demand .