What is the reason behind the Federal Reserve to keep rates near zero until  full employment, inflation come back?

Q: If the probability of losing your job remains good time to purchase a home because the Fed usually a…

A: Correct : low, lowers

Q: If the economy is able to self-correct from a negative GDP gap, why might the Fed wish to intervene…

A: A self-correcting economy refers to one that has the ability to stabilize the market without…

Q: A mission of the Federal Reserve is to promote a combination of low interest rates and low…

A: By the means of monetary policy and fiscal policies, the Federal Reserve and the government can…

Q: Which should central banks focus on more, unemployment or inflation? Why? Please cite sources to…

A: A increase in the cost of goods and services throughout the economy is referred to as inflation. A…

Q: Does the effectiveness of monetary policy depend on inflation expectations? Explain

A: Monetary policies are the policies that the central bank of any country conducts.This involves…

Q: Suppose the U.S. economy is initially at long run equilibrium, when there is an unexpected large…

A: When the U.S economy is in long-run equilibrium and the government spending falls unexpectedly, the…

Q: Many central banks now indicate that their primary objective is to keep inflation at a persistently…

A: The fluctuations in nations GDP overtime is shown by the business cycle models. It helps in showing…

Q: employment and low inflation

A: The Phillips curve depicts the relationship between the inflation rate and unemployment rate. It…

Q: The FED is facing a problem of unemployment. What policy should be used? How would each of the tools…

A: FED is used to refer to the federal government of the United States.

Q: An increase in the money supply will shift aggregate demand to the left. TRUE OR FALSE?

A: An increase in money supply decreases interest rate, which increases investment. Higher investment…

Q: Suppose that the current inflation rate is at 9% and the unemployment rate is 3%. Given this data.…

A: Monetary policy is the policy that is used to control the money supply in an economy to maintain the…

Q: What can the Fed do to reduce inflation when the government is spending too much money in the…

A: Inflation: It refers to a situation in which the prices of the goods and services in the economy…

Q: What actions can / should the Federal Reserve take to reduce unemployment?  Which type of…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: inflation

A: The Federal Reserve System is the United States of America's central banking system.It was in turn…

Q: What actions/tools can the Federal Reserve use to reduce Structural unemployment?

A: Unemployment: - unemployment is that portion of the labor force that is able to do work and looking…

Q: Banks follow the Fed’s lead to influence the economy and prevent a financial downturn? True or false

A: Fed is the supervisor of all the banks in the nation.

Q: The central bank decided to raise interest rates when it wanted to reduce aggregate demand to fight…

A: Introduction Central bank is the head bank of the country all the commercial bank and public sector…

Q: The Fed. was created in 1913. How stable were prices from 1801 - 1912?

A: The Federal Reserve System came into existence with the Federal Reserve Act of 1913. The Fed is…

Q: What measures should the central bank take to reduce inflation? Show by drawing a graph.

A: There are major measures the central bank can take to control inflation in the economy, which can be…

Q: The economy's unemployment rate is 2% and the inflation rate is 18%. The most appropriate policy for…

A: As we know that Phillips curve shows the relationship between inflation and Unemployment rate . And…

Q: If the Fed unexpectedly shifts to a more restrictive monetary policy, which of the following will…

A: A decrease in the money supply or the increment in the short-term interest rates constitutes a…

Q: Why is there a lag between the Fed’s actions and the economy’s response?

A: In the behaviour of the Fed and the response of the economy, there is a time lag. The point of touch…

Q: What do we mean by the Federal Reserve’s “targeted” inflation and unemployment rates?

A: Targeted inflation and unemployment rate are monetary phenomenon which are handled by the Federal…

Q: If the nation is currently in a recession, name one thing the Federal Reserve can do to affect the…

A: The monetary policies are those policies which are enacted by the central bank of a country to…

Q: Why might banks be reluctant to lend money if a country has a history of inflation rising…

A: The banks are the financial intermediaries and institutions that help the savers in the economy to…

Q: What is the Federal Reserve's mandate? O to print as many dollars as possible without causing…

A: The Federal reserve is the central bank of USA, it is assigned with the task of preparing and…

Q: You have the assignment of making a recommendation to the Chairman of the Fed during a period of…

A: Inflation refers to the situation of increasing the general price in the economy.

Q: Suppose an economy has a high rate of unemployment and a high rate of inflation. What kind of policy…

A: The measure that depicts a general rise in the price level of goods and services during a specified…

Q: The Fed has an obligation of the "full employment mandate". What is that exactly? How is it…

A: The Federal Reserve in the U.S was created on 23rd December 1913. It is the central bank of the U.S.…

Q: Why might banks be reluctant to lend money if a country has a history of inflation rising…

A: As inflation rates in the economy increase, the value of money decreases. At this point in time,…

Q: The main goal of the Federal Reserve is the unemployment rate.  True  False

A: False, because the main goal of Federal Reserve is to provide money supply which is consistent with…

Q: Which statement explains how the Federal Reserve can control rising inflation?

A:

Q: The fed controls the prime interest rate? True or False

A: Fed is the central bank of the Unites States of America.  The functions of Fed includes: (i)…

Q: Why is there no upward or downward pressure on the inflation rate when the economy is at full…

A: Inflation refers to the rise in general price levels in an economy. Philips curve shows the…

Q: What can be used to reduce aggregate demand and helps to control demand pull inflation?

A: Demand pull inflation is a situation when inflation is created due to shortage of supply of goods.…

Inflation and Purchasing Power Theory

In economic terms, Inflation refers to the increase in the costs of various commodities which are used in daily lifestyle like food, clothes, transport, etc. over a specific time. It may lead to a fall in the purchasing power of the people and also affects the exchange rate of the currency because of the price increase. As the purchasing power falls the unit of the currency in the economy falls. When the prices of the commodities are decreased, then the purchasing power of the consumers will rise, then it will lead to deflation and changes the currency of the base economy to that of the foreign economy which will lead to change in exchange rates.