Monetary Policy Federal Reserve & Federal Open Market Committee Worksheet

Question Description

  1. Define Monetary Policy
  2. As a member of the Federal Reserve, how would you stabilize the economy suffering from inflation using the Federal Open Market Committee (FOMC) tool of buying or selling U.S. Treasuries? Clearly indicate if the Federal Reserve will buy or sell U.S. Treasuries.
    • Discuss & illustrate the impact to the Money Supply & Money Demand Equilibrium graph
    • Discuss & illustrate the impact to the AS/AD Model
    • What’s the primary criticism of Monetary Policy?

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