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BAA - AAA CPIAll - Corporate Federal Items CPI Core Interest Budget Real GDP Unemploy - Inflation Inflation Rate Balance , Federal Growth ment Rate...
Consider the condition of the goods market in January 2019, using the numbers in the data table. What does the macro model predict will happen in 2019 and 2020, and what does this imply for monetary policy?
a.Output is above potential. Input costs will rise and aggregate supply will decrease, which will increase inflation. For counter-cyclical policy, the Fed should increase the federal funds rate.
b.Output is above potential. Input costs will rise and aggregate supply will decrease, which will increase inflation. For counter-cyclical policy, the Fed should leave the federal funds rate unchanged.
c.Output is above potential. Input costs will rise and aggregate demand will decrease, which will decrease inflation. For counter-cyclical policy, the Fed should increase the federal funds rate.
d.Output is above potential. Input costs will rise and aggregate demand will decrease, which will decrease inflation. For counter-cyclical policy, the Fed should leave the federal funds rate unchanged.
