Chapter 17, Problem 2FCT

To determine

In the long run, are either active or passive Fed policies likely to influence the unemployment rate? Explain briefly.

Introduction:

Active fed policies refer to the monetary policy in which one variable keeping constant the other is assumed to behave differently or the central banks own decision when implemented it is said to be an active fed policy. The passive fed policy refers to the policy which is yet to be implemented and are in the stages of brief discussions among the economists and the government. The passive policy once implemented it becomes an active policy.