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People called Fed watchers earn their living by trying to forecast what policies the Federal Reserve will implement within the next few weeks and months.

People called "Fed watchers" earn their living by trying to forecast what policies the Federal Reserve will implement within the next few weeks and months. Suppose that Fed watchers discover that the current group of Fed officials is following very systematic and predictable policies intended to reduce the unemployment rate. The Fed watchers then sell this information to firms, unions, and others in the private sector. If pure competition prevails, prices and wages are flexible, and people form rational expectations, then the Fed's policies Part 2 A. are likely to have no effect on the unemployment rate. B. are likely to have their intended effects on the unemployment rate. C. are likely to have a measurable effect on both unemployment and inflation rates. D. may or may not have an effect on the unemployment rate

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