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As of early March 2020, some commentators interpret the corona virus outbreak as a supply shock, some as a demand shock, and some as a
As of early March 2020, some commentators interpret the corona virus outbreak as a supply shock, some as a demand shock, and some as a combination of supply and demand shocks. On March 4 the Federal Reserve announced an emergency cut in its policy rate. If the corona virus was exclusively a supply shock, what would this cut tell us about the importance the Federal Reserve attributes to the goal of keeping inflation low, relative to the goal of keeping unemployment low?
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