magine you are a Federal Reserve economist. You are preparing a memo on policy suggestions for the president of your Reserve Bank, who will help decide the direction of future monetary policy. Examine "Current State of the Economy" below and make a policy recommendation: Should the FOMC pursue expansionary or contractionary monetary policy? Make sure you provide reasons for your recommendation. Identify the four monetary policy tools and how they could be used to pursue the policy recommendation. Specifically, describe how use of the tools will influence the federal funds rate, interest rates in general, and economic activity. Conclude by describing how the policy will help fulfill the Fed's dual mandate.

Current State of the Economy The inflation rate has been above 2 percent for quite some time; the most recent data show an inflation rate of 8 percent. At the same time, you are hearing employers complain about having a difficult time finding qualified workers to fill positions and having to raise wages and benefits to lure workers from other businesses. Meanwhile, the unemployment rate has fallen to a very low level.

give the answer of this question with explanation in long