Unit IV Discussion Topic: The Federal Reserve and Monetary Policy

Suppose that you are a member of the Board of Governors of the Federal Reserve System. The economy is experiencing a sharp rise in the inflation rate. What change in the federal funds rate would you recommend? How would your recommended change get accomplished? What impact would the actions have on the lending ability of the banking system, the real interest rate, investment spending, aggregate demand, and inflation? What other tools of monetary policy could you use and how?

Respond to this topic

Please respond using critical thinking and good communication skills. Include references when necessary to explain your viewpoints.