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The U.S. is a large open economy with floating exchange rates. You are the chair of the Federal Reserve. Your goal is to stabilize income,
The U.S. is a large open economy with floating exchange rates. You are the chair of the Federal Reserve. Your goal is to stabilize income, and you adjust the money supply accordingly. Under your policy, what happens to the money supply, the interest rate, the exchange rate, and the trade balance in response to each of the following shocks? a. President Biden increases taxes on corporations and the rich. b. The Congress imposes tariffs on the imports of capital goods like computers, telecommunications equipment and semiconductors
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