Answered>Order 2645

Hypothetical Scenario: *actual GDP is measured to be 3% below potential. Measured unemployment, by most accounts is thought to be 2% above the natural rate of unemployment. Given that current inflation is relatively low:

  1. What will the federal reserve most likely do at the next few Federal Open Market Committee?
  2. Assuming the Fed follows the policy course you set fourth in part (1), what should the fed be concerned with the years that follow?
  3. Given your answers in question 1 and 2, what do you think the Fed will have to do in terms of interest rate policy in the next few years?

I have to write an essay, so I’m not looking for spot on responses, just a general concept so I can write my essay.

 
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