Final Economic Policy Letter

Compose a letter that addresses monetary policy solutions to resolve a recession. In these paragraphs, be sure to provide the following information:

• Would the Fed use expansionary or contractionary monetary policy to eliminate the recession?
• Identify and explain the key interest rate the Fed controls.
• Explain how the Fed would achieve this interest rate target.
• Explain how quantitative easing could be used to eliminate the recession and how it is different from more traditional open market operations.
• Finally, remembering the dual mandate (two major goals) of the Fed, and identify the likely trade-off the Fed faces for conducting these actions.

Prior to revising and adding new material to your letter, complete the Monetary Policy Pre-Work Document (attached below).

Monetary Policy Pre-Work Document: c. Would they buy or sell bonds in the open market? Answer these questions and then use that information to write a clear and concise memo to the President of Econoland. Make sure you use complete sentences and create well-formed 2nd Paragraph paragraphs to communicate this information in the form of a memo or letter. Do not submit a list of bullets rather than paragraphs or include the listed questions in your response. Your work will be returned to you if you reference the United States any US political figure or party. This is 1. Identify and explain the key interest rate the Fed controls. not a political assignment. This is an economic policy assignment designed to assess how well you can apply the concept of monetary policy in the context of a recession. 2. Explain how the Fed would achieve this interest rate target. Answer the following questions and use the answers to create the final paragraphs of the letter addressing the monetary policy options for eliminating a recessionary gap. 3. Explain how quantitative easing could be used to eliminate the recession and how it is different from more traditional open market operations. 3rd Paragraph| 13 Paragraph 1. How will the actions you have identified affect Aggregate Demand? 1. What is monetary policy? 2. Who controls monetary policy? 2. How will the actions you have identified affect Real GDP? 3. Should the Fed use expansionary or contractionary monetary policy to eliminate a recession? 3. How will the actions you have identified affect the Unemployment Rate? 4. Finally, remembering the dual mandate of the Fed, identify the likely trade-off the Fed a. Would they increase or decrease money supply when using this type of monetary faces for conducting these actions. policy? b. Would they increase or decrease interest rates when using this type of monetary policy