essay question and graph You are the Chairperson of the Federal Reserve, the dat

Question

essay question and graph

You are the Chairperson of the Federal Reserve, the date is 2008 and a recession is ahead. Using the monetary tool(s) of your choice what would you do? You need to graph a money demand and supply graph, an Investment graph, and a GDP graph to show how monetary policy effects GDP. You also need to use the money multiplier, MPC and the GDP multiplier on the GDP graph

once again this is Macroeconomic class, please follow all the requirmnents and answer correctly, graph it too! Thank you for your time.

Explanation / Answer

Recession is a slowdown or a massive contraction in economic activities. A significant fall in spending generally leads to a recession. Hence, Federal Reserve will use monetary tools to increase the GDP of the country.

As the Chairperson of Fed I am responsible for the monetary policy stance and can use tools available for this purpose. The scenario of the future looks bleak as the economy faces rising unemployment and declining investment and consumption spending. All this is leading to a fall in aggregate demand that is pulling down GDP continuously, resulting in a recession.

In this contracting economy, where the danger of a recession exists, the Fed increases the money supply; it lowers interest rates, making it easier for businesses and consumers alike to borrow. That in turn encourages increased economic activity.

The graph is drawn below:

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.