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Dis 15_Macro

Dis 15_Macro

Q " In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent." (FOMC Statement) What does this mean? Has the Fed adopted a contractionary, expansionary or neutral monetary policy? How will you determine this? What was the Fed's policy trajectory before this statement? What factors have changed that produced this Fed policy decision? Based on your own research throughout this semester, do you agree with this policy or do you disagree with it? Why? (Remember to fully explain your opinion; these are NOT yes/no questions.)

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When the committee took the decision of maintaining the rate of target for the federal funds rate at 1-1/4 to 2-1/2 percent then it had decided of maintenance of the expansion of the economy. Along with this, it also took the decision of maintaining a string from of labor market and the rate of inflation to remain stable. But after reading the statement, I do feel that the Committee has adopted the monetary policy over the period. It is now extremely good to see that how the economy is actually looking like. Thus because of the proper implementation of the monetary policy, the economy is passing through the phase of expansion and they do also hold a strong form of labor market condition where the rate of inflation is being kept constant at about 2 percent over the period.