After you have studied Economics in the News on pp. 398–399, answer the following questions.

a. What was the state of the U.S. economy in the summer of 2021 when the Fed made the decision to keep the federal funds rate at near zero and to keep buying bonds?

b. What was the FOMC majority expectation about future employment, real GDP, and inflation in July 2021?

c. How would an earlier and faster rise in interest rates influence aggregate demand, the output gap, and inflation?