Macroeconomics + Economy 2009 Update 18th Edition by Campbell McConnell, Sean Masaki Flynn,Stanley Brue

Exercise 18

Suppose that you are a member of the Board of Governors of the Federal Reserve System. The economy is experiencing a sharp rise in the inflation rate. What change in the Federal funds rate would you recommend How would your recommended change get accomplished What impact would the actions have on the lending ability of the banking system, the real interest rate, investment spending, aggregate demand, and inflation