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Activity
Question 1
Read this press release from the Federal Reserve, and then answer the questions that follow.

Part A
Which Federal Reserve group is acting in this situation?


Part B
What decreased during this period?


Part C
What is the target range for the federal funds rate?


Part D
What inflation rate is ideal in this situation?


Part E
The text states that the Committee “expects inflation to rise gradually toward 2% over the medium term as the labor market improves further….” Why would the FOMC expect inflation to rise because of improvements in the labor market?




Part F
The text states, “The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market….” Why would the Committee raise the federal funds rate as the labor market improves?

Respuesta :

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Answer:

A. The Federal Open Market Committee is acting in this situation.

B. inflation

C. 0 to 1/4 percent

D. 2%

E. The Committee expects inflation to rise because more people have jobs. When more people have incomes, the demand for goods increases. Increased demand increases prices, which causes inflation.

F. Raising the federal funds rate decreases inflation because raising the federal funds rate increases the interest rates that banks charge each other for loans. Therefore, banks are less likely to take out loans to replenish their reserves. To keep their reserves at the required ratio, banks will lend less money.

Explanation:

PLATO

Answer:

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Explanation:

edmentum n plato

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