The Role of Monetary Policy in the Economy

The three articles for discussion appear in the Week 5 Video & Resources on page 2. If you have not read them yet, please read them now before posting. Hint: Use the questions you must write responses to as reading and note-taking guide.

Articles for Discussion Week 5

• How does monetary policy affect the U.S. economy? by the Federal Reserve Bank of San Francisco.
• Understanding the Role of Monetary Policy in the Economy by Christine Smith (Tuesday, March 31, 2020).
• Monetary Policy: Stabilizing Prices and Output by Koshy Mathai

Questions

In your initial response to the topic, you have to answer all questions:

1. Discuss the effect of monetary policy on inflation. To what extent can monetary policy influence inflation?
2. How can adjusting interest rates impact the economy?
3. Discuss the effect of interest rates on employment in the short run and the long run.
4. Describe the mechanism of how changes in monetary policy affect output and prices in the economy.
5. Reflection: the students should also include a paragraph in the initial response in their own words, using macroeconomic terminology, reflecting on what they learned from the assignment and how they think they could apply what they learned in the workplace or in everyday life.

Also, note that your answers should be written in your own words. Don't use quotes from the articles.