In the second paragraph of the June 30, 2004, FOMC statement, the committee affirmed that it increased the federal funds rate target partly due to the fact that "The evidence accumulated over the inter meeting period indicates that output is continuing to expand at a solid pace and labor market conditions have improved." Explain why this should be interpreted as a movement along the MP curve and not as a shift in the MP curve.

In the second paragraph of the June 30, 2004, FOMC statement, the committee affirmed that it increased the federal funds rate target partly due to the fact that "The evidence accumulated over the inter meeting period indicates that output is continuing to expand at a solid pace and labor market conditions have improved." Explain why this should be interpreted as a movement along the MP curve and not as a shift in the MP curve.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 5DQ

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