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7. Throughout 2017 and 2018, the Federal Reserve reduced its growth rate of the money supply. Annualized GDP growth slowly picked up from 1.7% to
7. Throughout 2017 and 2018, the Federal Reserve reduced its growth rate of the money supply. Annualized GDP growth slowly picked up from 1.7% to around 3.8% while inflation data did not rise much. During this time, the interest rate on the 3-month Treasury bill rose from around 0.5% to 2.4%. How can we explain this? Discuss the relative importance of the liquidity, income, price-level, and expected inflation effects on interest rates.
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