Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 4

Determine whether the Federal Reserve would pursue contractionary monetary policy, expansionary monetary policy, or no change in policy in each of the following situations.
a. Inflation is 10 percent, above its average of 3 percent in the last several years.
b. The output gap is positive.
c. Unemployment is at a record high.
d. The economy is experiencing full employment.
e. The economy is on the brink of deflation.
f. A new technology causes output to surge.