1)Although President Donald Trump and Federal Reserve ChairmanJerome Powell have been at odds on Twitter and in official statements, the two share remarkably similar views about the economy and what needs to be done to improve it. In particular, Powell has said repeatedly that low inflation, not high inflation, is the "greater danger."[1]

a)What are some of the pros and cons of a low-inflation policy? For a holistic response, discuss the implications of such a policy for different actors in the economy, including firms, taxpayers, domestic and foreign investors, lenders, borrowers, etc.

b)Suppose Powell and all the other members of the Federal Open Market Committee that controls monetary policy suddenly declare that they want money growth to be faster than in before. Show what would likely happen to interest rates and unemployment, using graphs and/or equations to help explain your answer.

c)Given the current macroeconomic conditions in the US and your response in part b), would YOU favor an expansionary or a contractionary monetary policy? Why?

[1] https://www.bloomberg.com/opinion/articles/2019-11-20/trump-and-powell-actually-agree-about-monetary-policy