Prime Interest Rate Rises Business Investment Falls M1 Rises at Faster Rate M1 Rises More Slowly GDP Rises Faster GDP Rises More Slowly Business Investment Rises Prime Interest Rate Falls Step 2 Monetary policy does not always work as well as the Federal Reserve would like. Sometimes one event does not follow from another as expected. As a team, decide which headlines may not necessarily follow from the previous one. Put a X through these arrows on the previous page. Explain why you have placed each X.
Prime Interest Rate Rises Business Investment Falls M1 Rises at Faster Rate M1 Rises More Slowly GDP Rises Faster GDP Rises More Slowly Business Investment Rises Prime Interest Rate Falls Step 2 Monetary policy does not always work as well as the Federal Reserve would like. Sometimes one event does not follow from another as expected. As a team, decide which headlines may not necessarily follow from the previous one. Put a X through these arrows on the previous page. Explain why you have placed each X.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Prime Interest Rate Rises
Business Investment Falls
M1 Rises at Faster Rate
M1 Rises More Slowly
GDP Rises Faster
GDP Rises More Slowly
Business Investment Rises
Prime Interest Rate Falls
Step 2
Monetary policy does not always work as well as the Federal Reserve would like.
Sometimes one event does not follow from another as expected. As a team, decide
which headlines may not necessarily follow from the previous one. Put a X through
these arrows on the previous page. Explain why you ħave placed each X.
Transcribed Image Text:FED Policy
Step 1
On the next page are two sets of headlines that occur when the Federal Reserve
uses open market operations. But the headlines are all mixed up. As a group,
decide which headline comes first, second, third and fourth. Then fill in the boxes
in the correct order.
The Federal Open Market Committee tells the New York Federal Reserve Bank
to SELL government bonds
Manetary
policy-
step by
step
The Federal Open Market Committee tells the New York Federal Reserve Bank
to BUY government bonds
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