Federal open market committee meetings

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Consider the following hypothetical scenario: actual GDP is measured to be 3% below potential. Measured unemployment, by most accounts, is thought to be 2% above the natural rate of unemployment. Given that current inflation is relatively low:

-What will the Federal Reserve most likely do at the next few Federal Open Market Committee (FOMC) meetings?

-Assuming the Fed follows the policy course you set forth in part (1), what should the Fed be concerned with in the years that follow?

-Given your answers in parts (1) and (2), what do you think the Fed will have to do in terms of interest rate policy in the next few years?

Reference no: EM132512113

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