Module7BorjanaCarney - If the reserve requirement(rr is 0.2 the simple deposit multiplier d is 1\/rr = 1\/0.2 = 5 The money multiplier mm is(1 c(c rr e

Module7BorjanaCarney - If the reserve requirement(rr is 0.2...

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1. In current business publications or on the FederalReserve Web site (), findthe press release from the most recent meeting ofthe FOMC. What is the targeted federal funds rate?How does the FOMC evaluate the balance of risksbetween its goals of price stability and sustainableeconomic growth? will react to changes in financial conditions.
1. Describe how the following statements relate tothe AD–AS model:a. The Fed has bought more than $2 trillion ofTreasury and mortgage bonds to stimulate the economy. b. The above actions by the Fed may cause inflationto rise to levels that most would consider unacceptable.These shift the aggregate demand curve outward as it stimulates the economy.When inflation rises, the aggregate demand curve moves up to the short-run aggregate supply curve c. The Fed expected a weaker dollar to help increase exports. d. Businesses already have ample access to cheapcredit and are reluctant to borrow, hire, and investfor other reasons.If business are still reluctant top borrow, hire, and invest the aggregate demand curve would shift to the right. A weaker dollar would move the aggregate demand curve to the right and move the economy closer to full-employment levels of ouput.

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