Recently released economic data provides evidence on inflation and economic growth. The core consumer price index (CPI) is stable, but the overall CPI has
risen somewhat. This is because the core CPI excludes food and energy costs, which are
sharply higher. These higher costs are causing the overall CPI index to rise and creating
possible future inflationary pressures. Unemployment is low, and job growth remains
positive, which indicates that the economy is continuing to expand.

2. Would you recommend raising or lowering the reserve requirement, raising or
lowering the federal funds target rate, or buying or selling government securities
on the open market? Explain why.