Module 12

1. What are the goals of monetary policy?
2. Who conducts monetary policy?
3. What are the Classical and Keynesian views of monetary policy?
4. What is the monetary policy instrument most used by the Fed?
5. What are three ways the Fed can lower the federal funds rate.
6. The economy is in a recession.
7. Describe the steps the Fed would take to address this.
8. What is the impact on the money market?
9. What is the impact of this policy on the aggregate market (AD/AS model)?
10. Based on the graph below:
11. What situation is this economy facing?
12. Explain the monetary policy that could be used to address this situation.
13. What are the effects of this policy on price level and output? Show this in the graph below.

1. What are the inside and outside lags for monetary policy?
2. Name two difficulties with implementing monetary policy.