Business, 28.05.2021 15:40 nathanstern21

Suppose that you are a member of the Board of Governors of the Federal Reserve System and the economy is experiencing an 8 percent inflation rate. Unemployment is at the full-employment level and the target interest rate is currently 4 percent. a. If the economy is experiencing a sharp rise in inflation, as a member of the Board of Governors, you would recommend
decreasing the federal funds rate.
setting the federal funds rate equal to the discount rate.
setting the federal funds rate equal to zero.
increasing the federal funds rate.
b. To lower the inflation rate to 4 percent, you recommend contracting the supply
increasing the reserve ratio, the IOER rate, or the discount rate, or selling bonds.
decreasing the reserve ratio, increasing the IOER rate or the discount rate, or buying bonds.
increasing the reserve ratio, decreasing the IOER rate or the discount rate, or selling bonds.
decreasing the reserve ratio, the IOER rate, or the discount rate, or buying bonds.
c. The recommendations you provided above would
reduce the lending ability of the banking system, decrease the real interest rate, and increase investment spending, aggregate demand, and inflation.
increase the lending ability of the banking system, decrease the real interest rate, and increase investment spending, aggregate demand, and inflation.
reduce the lending ability of the banking system, increase the real interest rate, and reduce investment spending, aggregate demand, and inflation.
increase the lending ability of the banking system, decrease the real interest rate, and reduce investment spending, aggregate demand, and inflation.

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Suppose that you are a member of the Board of Governors of the Federal Reserve System and the econom...

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