{"id":12348,"date":"2022-04-13T17:45:31","date_gmt":"2022-04-13T17:45:31","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-macroeconomics\/?post_type=chapter&p=12348"},"modified":"2024-09-11T16:39:20","modified_gmt":"2024-09-11T16:39:20","slug":"module-13-assignment-monetary-policy-output-and-prices","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-macroeconomics\/chapter\/module-13-assignment-monetary-policy-output-and-prices\/","title":{"raw":"Module 13 Assignment: Monetary Policy, Output, and Prices","rendered":"Module 13 Assignment: Monetary Policy, Output, and Prices"},"content":{"raw":"In this module you learned how changes in monetary impact interest rates, prices and GDP.\u00a0 In this assignment you will explore how the Federal Reserve can use monetary policy to impact inflation and economic output using the aggregate demand and aggregate supply framework.\u00a0 Answer the following questions:\r\n
    \r\n \t
  1. Suppose the US economy is experiencing inflation higher than desired but has relatively high output and low unemployment.\u00a0 What monetary policy actions may the Fed take to reduce inflation?<\/li>\r\n \t
  2. Using the aggregate demand and aggregate supply framework, what happens to inflation and output when the Federal Reserve uses a contractionary monetary policy.<\/li>\r\n \t
  3. If the Fed is successful in reducing inflation, what will the likely impact be on the unemployment rate in the US?<\/li>\r\n \t
  4. If banks are currently holding excess reserves will all the Fed\u2019s tools be equally effective?\u00a0 Examine how each of the Fed\u2019s three policy tools will affect the money supply when banks hold excess reserves.<\/li>\r\n \t
  5. In the 1970s the US experienced a significant period of \u201cstagflation,\u201d when both inflation and unemployment were high.\u00a0 Using the aggregate demand and aggregate supply framework, explain why monetary policy can be ineffective at solving both the problems of high unemployment and high inflation when the two occur together.<\/li>\r\n<\/ol>\r\n

    Rubric<\/h2>\r\n
    \r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n
    Criteria<\/strong><\/td>\r\nNot Evident<\/strong><\/td>\r\nDeveloping<\/strong><\/td>\r\nProficient<\/strong><\/td>\r\nDistinguished<\/strong><\/td>\r\nWeight<\/strong><\/td>\r\n<\/tr>\r\n
    Correctly identifies the tools of monetary policy to reduce inflation.<\/td>\r\n<\/td>\r\n<\/td>\r\n<\/td>\r\n<\/td>\r\n4<\/td>\r\n<\/tr>\r\n
    Correctly\u00a0identifies the impact of monetary policy changes on the aggregate demand curve.<\/td>\r\n<\/td>\r\n<\/td>\r\n<\/td>\r\n<\/td>\r\n4<\/td>\r\n<\/tr>\r\n
    Correctly identifies the tradeoff between inflation and output in the aggregate demand framework.<\/td>\r\n<\/td>\r\n<\/td>\r\n<\/td>\r\n<\/td>\r\n4<\/td>\r\n<\/tr>\r\n
    Correctly identifies how a bank\u2019s excess reserves can impact the effectiveness of monetary policy choices.<\/td>\r\n<\/td>\r\n<\/td>\r\n<\/td>\r\n<\/td>\r\n4<\/td>\r\n<\/tr>\r\n
    Correctly identifies how monetary policy is unlikely to solve the problems of high unemployment and high inflation when the two occur simultaneously.<\/td>\r\n<\/td>\r\n<\/td>\r\n<\/td>\r\n<\/td>\r\n4<\/td>\r\n<\/tr>\r\n
    <\/td>\r\n<\/td>\r\n<\/td>\r\n<\/td>\r\n<\/td>\r\nTotal: 20<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>","rendered":"

    In this module you learned how changes in monetary impact interest rates, prices and GDP.\u00a0 In this assignment you will explore how the Federal Reserve can use monetary policy to impact inflation and economic output using the aggregate demand and aggregate supply framework.\u00a0 Answer the following questions:<\/p>\n

      \n
    1. Suppose the US economy is experiencing inflation higher than desired but has relatively high output and low unemployment.\u00a0 What monetary policy actions may the Fed take to reduce inflation?<\/li>\n
    2. Using the aggregate demand and aggregate supply framework, what happens to inflation and output when the Federal Reserve uses a contractionary monetary policy.<\/li>\n
    3. If the Fed is successful in reducing inflation, what will the likely impact be on the unemployment rate in the US?<\/li>\n
    4. If banks are currently holding excess reserves will all the Fed\u2019s tools be equally effective?\u00a0 Examine how each of the Fed\u2019s three policy tools will affect the money supply when banks hold excess reserves.<\/li>\n
    5. In the 1970s the US experienced a significant period of \u201cstagflation,\u201d when both inflation and unemployment were high.\u00a0 Using the aggregate demand and aggregate supply framework, explain why monetary policy can be ineffective at solving both the problems of high unemployment and high inflation when the two occur together.<\/li>\n<\/ol>\n

      Rubric<\/h2>\n
      \n\n\n\n\n\n\n\n\n\n
      Criteria<\/strong><\/td>\nNot Evident<\/strong><\/td>\nDeveloping<\/strong><\/td>\nProficient<\/strong><\/td>\nDistinguished<\/strong><\/td>\nWeight<\/strong><\/td>\n<\/tr>\n
      Correctly identifies the tools of monetary policy to reduce inflation.<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n4<\/td>\n<\/tr>\n
      Correctly\u00a0identifies the impact of monetary policy changes on the aggregate demand curve.<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n4<\/td>\n<\/tr>\n
      Correctly identifies the tradeoff between inflation and output in the aggregate demand framework.<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n4<\/td>\n<\/tr>\n
      Correctly identifies how a bank\u2019s excess reserves can impact the effectiveness of monetary policy choices.<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n4<\/td>\n<\/tr>\n
      Correctly identifies how monetary policy is unlikely to solve the problems of high unemployment and high inflation when the two occur simultaneously.<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n4<\/td>\n<\/tr>\n
      <\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\nTotal: 20<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n\t\t\t
      \n\t\t\t

      Candela Citations<\/h3>\n\t\t\t\t\t
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      CC licensed content, Original<\/div>