We argued that Monetary Policy should have a short-run goal of achieving full-employment and a long-run goal of keeping inflation low.

Q. With the recent pandemic, the Fed not only used open market operations to increase liquidity in the banking system (an unprecedented amount), but the Fed also acted as a commercial bank, lending to municipalities. Fiscal policy also contributed with government spending by huge amounts and tax cuts. Accompanying these shocks that cause rightward shifts in AD, were supply chain shocks causing leftward shifts in AS. The resulting inflation is what we still have today. Offer fixes to the inflation problem, based on the Fed's history during the Volcker period (increasing interest rates and trying to influence inflationary expectations).